Dollar Is Near Week-Low Before Bernanke Speaks On Economy

UNLEASH THE CLAM! WE GO HAM!

The dollar was within 0.2 percent of a one-week low against the euro on bets Federal Reserve Chairman Ben S. Bernanke today may signal more stimulus is needed to spur a recovery in the world’s largest economy.

The yen declined versus most of its 16 major counterparts as Asian stocks extended a global rally, damping demand for lower-yielding currencies. The euro remained higher after its biggest gain in three months against the yen yesterday amid speculation the European Central Bank will act to rein in the region’s debt crisis after leaving its benchmark interest rate at a record low. Australia’s dollar rose after data showed the nation’s employers unexpectedly added workers in May.

“The U.S. dollar is certainly susceptible to indications that the Fed is looking at QE3, considering that long positions have been built up to near-record levels,” Mike Jones, a Wellington-based currency strategist at Bank of New Zealand Ltd, said referring to a third round of debt purchases known as quantitative easing. “It’s the rhetoric that really matters for markets.”

The dollar traded at $1.2563 per euro as of 1:06 p.m. in Tokyo after sliding 1 percent to $1.2582 in New York yesterday, when it touched $1.2586, the weakest since May 28. The U.S. currency added 0.2 percent to 79.35 yen. The 17-nation euro was at 99.68 yen from 99.63 yesterday, when it advanced 1.6 percent, its biggest gain since Feb. 24. The Australian dollar strengthened 0.2 percent to 99.50 U.S. cents.

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STIMULUS BIATCH!

China’s stocks rose the most in a week after the government delayed tightening bank capital rules and investors speculated monetary policy will be eased to limit the effects of Europe’s debt crisis on the economy.

Industrial & Commercial Bank of China Ltd. and China Vanke Co. led gains for lenders and developers after regulators postponed stricter rules until the beginning of next year in a move that may bolster loan growth. China Cosco Holdings Co., the biggest shipping company, advanced as European Central Bank President Mario Draghi said officials stand ready to act as the euro region’s outlook worsens. The stock market’s gains were limited before Chinese data this weekend that may show a deepening slowdown in the world’s second’s biggest economy.

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Asian stocks advanced the most in more than two months as oil and copper climbed on speculation policy makers around the world will take steps to revive the slowing economy. The Australian dollar rose to a three-week high after employers unexpectedly added jobs in May.

The MSCI Asia Pacific Index increased 1.5 percent by 1:06 p.m. in Tokyo, rising for a third day and heading for its biggest gain since March 27. The Nikkei 225 Stock Average added 1 percent, while Standard & Poor’s 500 Index futures rose 0.3 percent. Oil gained 0.6 percent in New York and copper rallied 0.6 percent. The Aussie strengthened 0.2 percent against the U.S. currency, while the cost of insuring Australian corporate bonds from default declined the most since Feb. 1.

European Central Bank President Mario Draghi said officials stand ready to act as the euro region’s growth outlook worsens. Federal Reserve Vice Chairman Janet Yellen said the U.S. economy “remains vulnerable to setbacks” and may warrant additional monetary stimulus. Indian Prime Minister Manmohan Singh pledged to revive growth in Asia’s third-largest economy through infrastructure spending. The number of people employed in Australia rose by 38,900 last month, the statistics bureau said.

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Wisconsin Governor Scott Walker said today his victory in yesterday’s recall election sets the stage for Mitt Romney to be competitive in his state in November’s election, while the presumptive Republican presidential nominee saw broader national implications to the result.

“I think he’d acknowledge he’s an underdog, particularly here in Wisconsin,” Walker said of Romney on MSNBC. “But I think anyone looking at the results last night would also acknowledge that it’s now competitive in Wisconsin.”

Romney, speaking at a fundraiser today in San Antonio, Texas, said the Wisconsin vote will “echo” throughout U.S.

“Yesterday was won by the people of Wisconsin doing the right thing and voting for conservative principles,” he said. “I think people recognize we just can’t keep going down the same path that we’re on. It ends up in calamity.”

Walker’s win prompted Democratic and Republican strategists to reassess Wisconsin’s political landscape and the role the state will play in the presidential race. Until earlier this week, target states listed by President Barack Obama’s campaign didn’t include the state, which has voted Democratic in the past six presidential elections, albeit narrowly at times.

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Australiaunexpectedly added workers last month, capping the best January-to-May period of hiring in five years and prompting traders to pare bets on interest-rate cuts as the local dollar stages its strongest rally this year.

The number of people employed rose by 38,900 in May, after a revised 7,000 gain in April that was lower than previously reported, the statistics bureau said in Sydney today. The median estimate was for no change in employment in a Bloomberg News survey of 23 economists. Thejobless rate rose to 5.1 percent from a revised 5 percent in April as participation increased.

The local currency jumped 2.5 percent this week as the jobs data and a gross domestic product report showing the economy expanded 1.3 percent last quarter, more than twice the level forecast, underscore the nation’s resource-fueled growth. Reserve Bank Governor Glenn Stevens cut interest rates by 75 basis points in the past two meetings, to 3.5 percent, to shore up the economy as the outlook in Europe andChina deteriorates.

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This guy is a genius and this is his insight into China’s role in the world economy

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HOLY SHIT

The Tokyo market slumped to a 28-year low on Monday as Asian shares dived on fears of a nightmare scenario of euro-zone breakup, U.S. economic relapse and a sharp slowdown in China.

Investors hedged against global financial and economic crisis, heading for havens such as the benchmark 10-year Japanese government bond whose yield fell below 0.80 percent to its lowest since July 2003. Ten-year JGB futures prices jumped to a 19-month high.

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China’s stocks fell the most in six months after the nation’s non-manufacturing industries expanded at a slower pace for a second month and fewer U.S. jobs were added than economists estimated.

PetroChina Co. (601857), the second-largest oil refiner, dropped to a record low as the Shanghai Securities News reported fuel prices may be cut and JPMorgan Chase & Co. lowered its estimate for China’s gross domestic product for the second time in a month. Sany Heavy Industry Co., China’s biggest machinery maker, declined 4.4 percent after Nomura Holdings Inc. reduced its outlook for the industry.

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Sony Corp. (6758) dropped below 1,000 yen in Tokyo trading for the first time since 1980, when the Walkman was new, after Japan’s currency gained and the U.S. added jobs at a slower-than-estimated pace.

The shares fell 1.7 percent to close at 996 yen on the Tokyo Stock Exchange. Sony, which recorded an all-time intraday high of 16,950 yen in March 2000, last closed below 1,000 yen on Aug. 1, 1980, according to data compiled by Bloomberg.

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European stocks dropped on concern the euro-area debt crisis is deepening and as evidence mounted that China’s economy is slowing down. U.S. index futures and Asian shares also retreated.

Deutsche Lufthansa AG (LHA), Europe’s second-biggest airline, slipped 1.1 percent after Financial Times Deutschland reported the company may sell its catering unit. Q-Cells SE jumped 3.6 percent after a report that China’s Hanergy Solar Technology Ltd. will buy the German solar-cell and module maker’s subsidiary Solibro GmbH.

The Stoxx Europe 600 Index fell 0.7 percent to 233.53 at 8:15 a.m. in London. The benchmark measure has declined 14 percent from its 2012 high on March 16 amid growing concern that Greece will be forced to leave the euro currency union. Standard & Poor’s 500 Index futures expiring in June lost 0.6 percent. The MSCI Asia Pacific Index slid 2.3 percent.

“Sentiment has slumped after growth indicators failed to inspire markets on Friday,” Stan Shamu, a market strategist at IG Markets in Melbourne, wrote in an e-mail. “Lead indicators across the U.S., Europe and Asia are adding to fears of further economic weakness ahead in the global economy.”

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Switzerland is threatening capital controls to repel bank flight from Euroland. The Swiss two-year note has fallen to -0.32pc, not that it seems to make any difference.

Denmark’s central bank said it was battening down the hatches for a “splintering” of EMU. It has cut interest rates twice in a matter or days and pledged to do whatever it takes to stop euros flooding into the country. Contingency plans are on the lips of officials in every capital in Europe, and beyond.

On a single day, the European Commission said monetary union was in danger of “disintegration” and the European Central Bank said it was “unsustainable” as constructed. Their plaintive cries may have fallen on deaf ears in Berlin, but they were heard all too clearly by investors across the world.

Joschka Fischer, Germany’s former vice-Chancellor, said EU leaders have two weeks left to save the project.

“Europe continues to try to quench the fire with gasoline – German-enforced austerity. In a mere three years, the eurozone’s financial crisis has become an existential crisis for Europe.”

Yes, those are trailers in the background.Former bath-salts addict: ‘It felt so evil’

(CNN) — The man is strapped onto a gurney and restrained, yet he is singing, making faces and twitching.

“You know where you’re at?” a paramedic asks him, but Freddy Sharp can’t answer. He was, he explained later, off in his own world after overdosing on synthetic drugs known as “bath salts.”

“I’d never experienced anything like that,” Sharp told CNN’s Don Lemon. “It really actually scared me pretty bad.”

He said he was hallucinating about being in a mental hospital and being possessed by Jason Voorhees, the character from the “Friday the 13th” movies.

“I just felt all kinds of crazy,” said Sharp, now 27, of Tennessee, who says he hasn’t used bath salts in months.

“It felt so evil. It felt like the darkest, evilest thing imaginable.”

American International Group Inc. (AIG) Chief Executive Officer Robert Benmosche saidEurope’s debt crisis shows governments worldwide must accept that people will have to work more years as life expectancies increase.

“Retirement ages will have to move to 70, 80 years old,” Benmosche, who turned 68 last week, said during a weekend interview at his seaside villa in Dubrovnik, Croatia. “That would make pensions, medical services more affordable. They will keep people working longer and will take that burden off of the youth.”

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Spanish Prime Minister Mariano Rajoy said European leaders should reinforce efforts to protect euro- area banks, ratcheting up pressure on German Chancellor Angela Merkel to back new ideas for a resolution of the debt crisis.

With markets bracing for further deterioration in Spain’s finance sector and a possible Greek departure from the 17-member euro area, Rajoy on June 2 added his voice to calls for a more robust “banking union” in Europe, lending his support for a centralized system to re-capitalize lenders. On the same day, Merkel toughened her opposition to euro-area debt sharing, telling members of her party in Berlin that “under no circumstances” would she agree to German-backed euro bonds.

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LONDON — As Spain’s economic crisis deepens and uncertainty swirls over Greece’s future in the euro zone, the guardians of the increasingly fragile European monetary union are near a moment of truth: Can they muster the will and resources to keep the euro zone from breaking apart?

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The summer of 2012 is looking like an “eerie” echo of 2008 but euro zone sovereign debt has replaced mortgages as the risky asset class that markets are anxious about, said Robert Zoellick, President of the World Bank.

Banks are under stress and depositors have begun to “jog,” Zoellick wrote in an editorial in the Financial Times on Thursday.

“The European Central Bank, like the U.S. Federal Reserve in 2008, has sought to reassure markets by providing generous liquidity, but collateral quality is declining as the better pickings on bank balance sheets are used up,” he added.

To prevent investors from fleeing in panic, Europe must be ready with more than liquidity injections to contain the consequences of a possible Greek exit. “If Greece leaves the eurozone, the contagion is impossible to predict, just as Lehman (Brothers’ collapse) had unexpected consequences,” Zoellick said.

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(Reuters) – Italian Prime Minister Mario Monti believes eurobonds will become a reality in the 17-nation euro zone and that Greece will remain in the single currency, he told a Greek newspaper on Saturday.

Monti, a respected former European commissioner who became Italy’s prime minister in November, was known to be a supporter of eurobonds – unlike politicians in European Union paymaster Germany – but his comments were some of his strongest on the subject yet and looked like an attempt to sway Berlin.

“I believe we will have eurobonds in one form or another because our union is becoming all the more integrated,” Monti told the Sunday edition of the To Vima newspaper in an interview made available on Saturday.

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(Reuters) – Iran has warned the United States not to resort to military action against it, saying U.S. bases in the region were vulnerable to the Islamic Republic’s missiles, state media reported on Saturday.

The comments by a senior Iranian military commander were an apparent response to U.S. officials who have said Washington was ready to use military force to stop what it suspects is Iran’s goal to develop a nuclear weapons capability.

World powers held talks with Iran in Baghdad on May 23-24 in an attempt to find a diplomatic solution to their concerns over its nuclear program, which Tehran maintains is entirely peaceful. Another round was set for June 18-19 in Moscow.

“The politicians and the military men of the United States are well aware of the fact that all of their bases (in the region) are within the range of Iran’s missiles and in any case … are highly vulnerable,” Press TV reported Brigadier-General Yahya Rahim Safavi as saying.

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(Reuters) – Throughout his presidency, Barack Obama hasn’t exactly been a friend to marijuana users.

Sure, he has acknowledged smoking pot as a young man, but he has disappointed marijuana advocates by opposing its legalization, regulation and taxation like alcohol.

And the Justice Department’s occasional crackdown under his administration on medical marijuana dispensaries, which 17 states and the District of Columbia allow, has angered others.

So now, with Obama facing a stiff challenge from Republican Mitt Romney in the November 6 election, it’s ironic that his chances of winning the key state of Colorado could hinge on marijuana legalization, supported by a growing number of Americans.

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All eyes on Threadneedle Street this week as the City waits (prays) for the Bank of England to fire up its magic money machine at the June gathering of the monetary policy committee.

Apart from the economic repercussions of the MPC’s deliberations, the two-day meeting gives it a shot at making history and becoming the first body to summon the fortitude to resist the charms of Christine Lagarde, beguiling head of the International Monetary Fund.

By Thursday we should know if her siren calls for the UK to make further interest rate cuts and create more electronic money have been fended off by the nine-strong committee, although the odds on that are shortening. Poor economic news on Friday (May’s PMI survey was a shocker) has been described by Deutsche Bank’s George Buckley as a “game changer”. Meanwhile, Citi’s Michael Saunders muses: “We continue to expect that worsening economic prospects will prompt the MPC to expand QE [quantitative easing] markedly further – to a total of about £500bn – and that the next instalment will occur soon. On balance, we forecast the MPC will expand QE by another £50bn at the June meeting.”

Surely the Bank’s nonet of middle-aged men wouldn’t consider frustrating the French temptress

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