The most watched and followed couple in the global financial community is known as Merkozy. The future of Europe and the global economy hang in the balance influenced by Chancellor of Germany Angela Merkel and French President Nicolas Sarkozy. How the two European leaders handle the Euro zone crisis will have a ripple effect throughout the world. The situation in the Euro zone is messy and complicated that requires an imaginative and swallow your medicine type of solution. European Unions leaders are meeting on October 23rd to brainstorm and bring about a sweeping plan for tackling the Euro zone debt debacle, but a breakthrough resolution is not anticipated until another meeting on October 26th which could be a far stretch. Whatever they come up with will likely delay the inevitable for the next on the brink disaster.
A popular game is being played by the excessive high debt nations of the world. It’ called kick the can down the road. A few days ago the major central banks of the world converged and agreed to provide a safety net of support in case something unsurprisingly horrific were to occur within the Eurozone. After the announcement, the European equity markets rallied as the U.S. dollar and the price of gold dropped precipitously. Greece’s fiscal dilemma has not been confronted with a legitimate solution. Instead, a temporary band-aid is placed on the wound and swept under the rug with the notion of dealing with it later. Greece is in the spotlight for now while Italy, Spain and Portugal are waiting in the wings for their turn of attention. The United States has an incredible challenge tackling its debt headache. It would take a unified resolve and commitment to get over the hefty hump. Does anyone really think that the massive debt problem can be trimmed to a feasible level without civil backlash and contempt?
The investor fear gauge also known as the Volatility Index is widely used to measure market risk. The VIX soared 35.41% higher today to 31.66 reflecting the market mood.
The big market dump started in Asia and worked its way into Europe then finally hit America.
By the end of the day… stocks, gold and oil closed sharply lower. Over the last 10 trading days U.S. stocks have lost more than 10%, the traditional definition of a market correction.
I don’t think we’ve seen the high for the year on the VIX. The American economy is anemic and Europe’s problems are far from over.
Sugar dazzled higher after an industry group said the Brazilian sugar harvest would have a significant output decline compared to last year. According to Unica, production could tumble as much as 1 million metrics in the current season compared with a year earlier. The sweet white granular substance has gained nearly 73 percent the past year.
Raw sugar for October delivery climbed 1.84 cents, or 6.6 percent, to settle at 29.52 cents a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest gain since Oct. 7. Cane processing will total 535 million metric tons in the 2011-2012 season, or 40 million tons less than the previous estimate and below last year’s harvest of 557 million, based on a report from Czarnikow Sugar Futures Ltd.
Goldman Sachs and Morgan Stanley recently released upbeat reports with a positive outlook for sugar prices. It looks highly possible that sugar can reach at least $34.00 before the end of the year.
Check out this chart http://bit.ly/nV2LNo . For non-futures traders, exchange traded funds are available, (SGG) and (SGAR).