Does the Chinese stock market presage the U.S. market's direction? If so, the U.S. market is set for a fall.

The economies of China and the U.S. are in effect Siamese Twins, joined at the hip. By pegging their currency to the U.S. dollar, the Chinese central government has tethered its economy to both U.S. policy and the U.S. economy.

Since the U.S. economy is still considerably larger than China's, and the yuan/renminbi is pegged to the dollar (and not vice versa), then we might expect China's stock market to follow the American market's lead.

As expected, the two markets are clearly correlated, often acting in lockstep (both rising or falling together). But China's markets also seem to act as the canary in the coalmine for the U.S. markets, declining before U.S. markets plummet.
Full article at: US Stocks

Currency, like all forms of abstract value, is based on trust. And trust itself is based - except among the most naïve - on experience, and the repetitive demonstration of fidelity, whether positive or negative. At present, the US dollar, which had experienced a gradual rise during the 20th Century to the position gained well into the Cold War of being the trading world’s reserve currency. It had the mass, in terms of volumes of available currency; it had the backing of an indisputably wealthy national asset base to move away from the gold standard; it had stable governmental backing.
Full article at: Reserve Currency

The European currency has depreciated dramatically against the US dollar in the past few months, falling from over $1.50 on December 1st to $1.35 today. The move has caused many investors to question the viability of the European Union and its currency, while also serving to reinforce the notion of the USD’s position as the world’s reserve currency.

To be clear, there has never been any question in my mind that the euro is just another flawed fiat currency. It could never serve as a real place holder for investor’s wealth or become a viable alternative to owning precious metals. However, it deserves to maintain its status as an excellent diversification- currency for those who hold excess dollars. But we currently find the question being asked more today than ever before if the USD can act as a safe haven from the troubles over in Euro land? The answer to that question can be found in the data and the data clearly shows that it cannot.
Full article at: US Dollar & Euro

The U.S. Dollar is Finally Getting Invited Back to the Investment Party

The buck is up 6% against the euro in the last three weeks. Notwithstanding problems in Greece and Spain, and the attendant complications for the E.U., this is a pretty good performance.

Illustrating an important lesson. Don't count the dollar out too soon.
Full article at: US Dollar

The President’s 2011 budget proposal was so outrageously egregious that Obama had to hold a special conference on Monday just to spin the news.

The scope of the proposed budget for fiscal 2011 is $3.8 trillion. The difference between revenue and expenditures for this fiscal year will leave us with a deficit of $1.6 trillion and, amazingly enough, that shortfall will equal 10.6% of GDP—the highest since WWll and $200 billion more than 2009! Next year’s deficit is slated to post just a $300 billion reduction to $1.3 trillion.

Full article at: Private Sector