Gold futures soar above $1,000 an ounce Gold futures briefly broke the psychologically important level of $1,000 an ounce Thursday, propelled by ongoing dollar weakness and bleak news from the financial sector. Gold soared as high as $1,001 an ounce on the New York Mercantile Exchange. Gold for April delivery was last up $17.50 at $998 an ounce. "Gold prices looked set to finally achieve the $1,000 mark this morning, as background market conditions shifted from bad to worse overnight," said Jon Nadler, senior analyst at Kitco Bullion Dealers, in a research note. "This will likely become known as the Carlyle/Drake Rally," Nadler said. "The imminent doom of the bond fund and probable demise of the hedge fund sent icy shivers through the financial markets that way overshadowed the (brief) cheer we witnessed following the Fed's term facility plan the other day."
Despite the Federal Reserve's efforts Wall Street fears a big US bank is in trouble Global stock markets may have cheered the US Federal Reserve yesterday, but on Wall Street the Fed's unprecedented move to pump $280 billion (£140 billion) into global markets was seen as a sure sign that at least one financial institution was struggling to survive. The name on most people's lips was Bear Stearns. Although the Fed billed the co-ordinated rescue as a way of improving liquidity across financial markets, economists and analysts said that the decision appeared to be driven by an urgent need to stave off the collapse of an American bank. "The only reason the Fed would do this is if they knew one or more of their primary dealers actually wasn't flush with cash and needed funds in a hurry," Simon Maughan, an analyst with MF Global in London, said.
Carlyle Capital on verge of collapse Carlyle Capital, the bond fund affiliated with private equity firm The Carlyle Group, is on the verge of collapse after failing to agree a new financing deal with lenders. The fund said late Wednesday that it expects lenders will soon take possession of "substantially all" its remaining assets after it was unable to meet surging margin calls on its portfolio of residential-mortgage-backed securities. Carlyle's woes contributed to a slump in European and Asian stock markets Thursday as investors feared credit problems will continue to spread. The news also helped drive the dollar below 100 yen for the first time since 1995. So far, Carlyle said it's defaulted on $16.6 billion of its debt and its remaining borrowing is expected to go into default soon.
Retail sales sink 0.6% in February Consumer spending weakened again in February as U.S. retail sales fell 0.6%, the Commerce Department reported Thursday. Most kinds of retail stores reported lower seasonally adjusted sales in February even before the impact of inflation was counted. The figures were weaker than expected by Wall Street economists, who forecast no change in retail sales. Sales in November and December were also revised lower on balance by 0.2%. Sales fell 0.7% in December and rose 0.4% in January. Over the past three months, sales were down 0.1% compared with the previous three months. "These data suggest that the economic drag from housing and the much tighter credit standards is slowly undermining consumer spending,"
Dollar's tumble rattles global markets The dollar tumbled to its lowest in 12 years against the Japanese yen and was weaker against a string of currencies as fears for the health of the US economy deepened. The currency has been sliding all year as the slump in America's housing market and the subsequent crisis in financial markets shows no sign of easing. Today's weakness, particularly marked against the yen, was triggered in part by the news that the assets of a large credit fund owned by private equity giant Carlyle Group will be seized by creditors. Federal Reserve chairman Ben Bernanke's fear of a full-blown economic crisis - made clear this week by his pledge to throw $200bn at commercial banks - has sent many investors fleeing dollar-based assets. With US interest rates already down 2.25 percentage points this year, and expected to be cut further, the currency is holding little attraction for international investors.
$5 Gas By Labor Day If gasoline prices move from their current average price of $3.20 to $5, the cost of fuel for a family that spends $50 a week for gas would move up over $1,000 a year. That would wipe out any tax rebate payments from the Federal government and drive the economy deeper into its currently slowdown. It would also further fracture already delicate P&Ls and balance sheet at large auto makers and airlines. Retailers would get less traffic. Very few industries would be spared some effect. Rising oil prices cannot be fixed by the Fed, That means that the most crushing blow to the economy, higher fuel prices, is largely beyond the control of the government. Rising crude is driven by futures speculation, the falling dollar, and an imbalance of supply and demand.
Jim Rogers: 'Abolish the Fed' Federal Reserve Chairman Ben Bernanke should resign and the Fed should be abolished as a way to boost the falling dollar and speed up the recovery of the U.S. economy, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe Wednesday. Asked what he would do if he were in Bernanke's shoes, Rogers, who slammed the Fed for pouring liquidity in the system and accepting mortgage-backed securities as guarantees, said: "I would abolish the Federal Reserve and I would resign." If this happened, "we don't have anybody printing money, we don't have inflation in the land, we don't have a collapsing U.S. dollar," he told "Squawk Box Europe."
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