BRICS growing in stature

But nonetheless, these countries are the straws that stir the global growth drink… Their problem, though, is how they act as a group, when they have very different political systems and economies? But for now the BRICS are feeling strong, and making statements like: The BRICS want to put an end to the dominance of the Western economies… And “the BRICS oppose use of force in Libya.” This just shows me that they are feeling like they are strong enough now to direct things… I don’t think that the time is here…

The most important thing about the strength of the BRICS is that they will have a lot of pull in the future, to demand what currency is considered the reserve currency of the world… Think about that for a minute, folks… I don’t know about you, but it puts shivers down my spine!

OK… Let’s talk about something else besides BRICS! Let’s see… Oh! Here we go… You’re going to like this one, kids… European Central Bank (ECB) Board member Bini Smaghi was talking last night and said that further ECB rate hikes would depend on “the economy and inflation.” He went on to note that, in trade-weighted terms, the euro (EUR) is roughly in line with its level in 2005 and in real effective terms is still 10% below the level at that time. Personally, I think that we’re hearing central bank parlance from this ECB member that the euro doesn’t enter into the decision for rate moves.

That’s a good thing to know up front, because with the euro above 1.40 (currently 1.44), it’s above the ECB’s comfort level for the currency, but that did not enter into the discussion of the recent rate hike… I like knowing that, for when we get to June or July, and the ECB is greasing the tracks of another rate hike, if the euro is stronger than it is now, we don’t have to worry about that getting in the way!

And, there was an interesting thing that happened overnight in Asia… The Monetary Authority of Singapore (MAS) announced that they would re-center the currency band, and allow faster appreciation of the Singapore dollar (SGD), to help combat inflation. This was in reaction to the news that the Singapore economy grew at an annualized rate of +23.5%, more than double the forecasts for +11.4% growth! WOW! The Sing dollar rallied on the announcements.

For some time now, I’ve stated at this time and place, with the Chinese renminbi (CNY) still manipulated every day and traded on a non-deliverable forward, that I prefer the Sing dollar as a proxy for Chinese renminbi appreciation… These Asian countries will all keep their currencies going in the same direction, as they are all in competition for exports… And the MAS does something that most countries don’t have a clue about, and that is… Using the Sing dollar’s strength to help offset inflation.

I also saw a blurb go across the screens yesterday regarding Indian investors and silver… According to the FT, Indian investors, long known for their enthusiasm for gold, are switching to silver bullion, as they expect it to generate higher returns… I wonder if they read that in the Pfennig, or the NewsMax story that I appeared in, claiming that silver was the new gold? HA!

This morning, the US data cupboard will print March PPI, which is expected to continue to show increases in wholesale inflation… Yesterday, the data cupboard printed March retail sales, which were less than forecast at 0.4%, less autos they were 0.8%… A major contributor to the sales were gas receipts… Which is not a good thing for our economy, as we’re spending our disposable income on gas, which lasts about a week in the gas tank, and then is gone, used up… And all the other things that consumers would normally be spending their hard earned cash on, get passed by, because there’s nothing left for them…

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