Wednesday, August 09, 2006

It Tolls for Thee Rupert

EUR/USD 1.2892 Hi 1.2902 Low 1.2763
USD/JPY 114.86 Hi 115.77 Low 114.79
AUD/USD 0.7651 Hi 0.7658 Low 0.7563
EUR/JPY 148.04 Hi 148.31 Low 147.61

Everything is going to plan and yet, and yet there is disorder in the house. Joe Lieberman just got tossed out. No matter, they don't use voting machines in Connecticut. And anyway he was a Democrat. Ok, he was the closest thing the Democrats have to a Republican, but a Democrat nevertheless. The next U.S. election is not at risk. The good old boys have it all tied up. And yet, and yet. There is talk that Condoleezza Rice is furious at being forced to toe the Bush line instead of calling for an immediate cease fire in Lebanon. Rice's thinking is (reportedly) that the U.S. failure to call for a cease fire has left the U.S. isolated in the Arab world and in the world in general. She is right. Whatever happens now it's too late. The U.S. has lost its foreign policy credibility in the wider world.

Ben Bernanke, the mild, kept rates steady yesterday. For now the USD reaction has been muted. But the Stock Market saw no relief. The market is not looking at interest rate relief any more, it is looking at recession: heading our way and fast. And stocks don't like it. The longer term risks for the market are substantial. In a slow down (which Bernanke implicitly confirmed) could it be any other way?

The USD is holding. Not rallying, holding. But for how long? Bernanke took a big risk yesterday at a crucial time in history. This isn't just any old slow down underway in the States. Right now the U.S. has wars to finance, an enormous external funding requirement and a fairly hostile Global Environment to deal with. The USD never looked more vulnerable.

Back in Britain, there is open revolt in some quarters. Tommy Sheridan just fought and won a libel case against News Corp (in his words "the most reactionary scab outfit in the world"). The mood is changing. Anger with News Corp's decades long interference in the British political process is beginning to rear its ugly head. And that anger runs deep and cuts across all social classes. News Corp is now under police investigation for illegal activities involving 'phone tapping at the Royal Household. The Windsors never were a News Corp favourite, after all what deals could Murdoch possibly offer the Queen? And you can't play "King Maker" with an established royal household in situ. Much better back room deals with ambitious politicians. And now the Windsors fight back. 'Bout time.

It looks like the good old boys didn't count on the impact of the Blogosphere. Rupert Murdoch may own MySpace, but who cares? A few geeks can have another MySpace up and running in days. Barriers to entry have tumbled and it is no longer possible to monopolize news information. Makes things just a bit tricky, doesn't it? Don't send to know for whom the bell tolls Rupert for surely it tolls for thee. Elizabeth has gone, Lachlan has taken off, leaving James, but for how long? Your new Chinese wife didn't get News Corp anywhere in China. Now, of course, News Corp is publishing all sorts of nasty stories on China (sore losers at News Corp). When Rupert was courting China, HarperCollins (yeah, don't ask: another Murdoch acquisition) went as far as to refuse the publication of Chris Patten's memoir for fear of upsetting the Chinese Government. But then there were deals to be made, media to be acquired. Now the News Corp venture in China is over and the gloves have come off.

That would really be something, wouldn't it? Dragging the Chinese into the hostilities in the Middle East. And Russia? Where is News Corp on Russia? Actually I don't want to know. As Rupert Murdoch stares his own mortality in the face perhaps there would be nothing he would find more satisfying than taking the world with him in a blaze of destruction. A send off, to end all send offs. The News Corp crowd have obviously never heard of the risks of arrogant overreach.

Suddenly the colossus looks vulnerable.

Oil 76.58
Gold 652.50

OIL continues to stay bid, but no more. GOLD has seen profit taking. The world is waiting. A lot hinges on what happens with the current U.N. negotiations regarding the Israeli war on Lebanon. The Arab League is holding out for a withdrawal of all Israeli troops from Lebanese soil as a necessary precondition for peace. The U.S. (or rather the Bush Administration) and the Israelis fear that any type of concession will be seen as weakness. Arrogant overreach is suddenly EVERYWHERE.

We could see profit taking in the short term in both OIL and GOLD (let's give the shadowy forces intent on manipulating the market their due). The longer term outlook, though, remains bullish for both.

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This is great analysis, interesting thinking. I'll be back to visit.
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