Market Talk

I sat in a room with these three guys – John Mauldin, Marc Chandler and Christian Menagatti — for an hour yesterday along with a handful of other reporters, and it was completely fascinating, so the 35 minutes you might invest in this video is well worth your time.

Incidentally, we’ll have Mauldin on tomorrow’s Markets Hub, live at WSJ.com at 10:30 a.m.

Bernanke and company’s continued insistence this week that the Fed’s uber-accommodative policy hasn’t played a role in driving up commodity prices continues to grate, and undermine the central banker’s credibility.

We’ve highlighted the extensive (and comprehensive) list of commodities with rising prices in ISM’s manufacturing survey, with few commodities reported as being in short supply. And no commodities — zilch — falling in price.

Well, no surprise, ISM’s February non-manufacturing survey out today shows essentially the same thing. Count 41 separate items listed as commodities up in price, while only three — cotton, cotton products and electrical components — are considered in short supply. Two commodities were down in price –  computer supplies and janitorial services.

Perhaps there are some nuances to supply and demand, and their effect on commodity prices that Dr. Bernanke has uncovered to explain all this. I’m certainly not an expert, but I can read a chart, and just about every commodity I look at began rising right after the Fed chairman’s Jackson Hole QE2 warm-up speech in late August.

To illustrate this even better, let’s go back to ISM’s reports, pre-Jackson Hole. Take a glance at the August manufacturing survey. Just three — three commodities – up in price (caustic soda, copper and corrugated containers); three down in price (polyethylene, polypropylene and steel) and only one — capacitors — listed in short supply. Continue reading…

That ADP report this morning really cooled the stock market’s heels, although the little buggers seem to be getting their bearings back here lately. Meanwhile, the action continues to be in the forex market, where the dollar is getting beaten like a rented mule. Here’s the sober take on it on the Markets Hub.

Japan’s moves to intervene in the forex market for the first time in more than six years has has the immediate impact the Japanese government was looking for: a tumbling yen.

But whether the move is the right one over the long haul is up for debate. Several bloggers have already weighed in:

LA Times’ Tom Petruno: “The announcement had the desired effect, scaring currency traders away from trying to push the yen higher…Despite its aging population and huge government debt load, Japan and the yen have been viewed by some foreign investors as safer havens than the US in the aftermath of the 2008 financial crisis…We live in a global economy in which very few countries want a strong currency. The weaker your currency the cheaper your exports get for foreign buyers. In a world glutted with unused industrial capacity and with labor, everyone’s looking for someone to buy their stuff.

Time’s Curious Capitalist blogger Michael Schuman: “Tokyo’s decision is bad, bad, bad – for Japan, and just about everyone else…A weak yen, therefore, becomes a kind of policy crutch, one that allows the economy to produce a bit of growth while allowing its befuddled politicians to avoid tough decisions on economic reform…The bigger problem with Wednesday’s yen intervention, however, is the signal it sends to the world. That message is: We want to export to you, not vice versa, for the good of our own recovery, not yours…The fact is that not every country can export its way out of the Great Recession.”

Reuters’ Felix Salmon: “In other words, the Bank of Japan isn’t simply selling yen, it’s printing yen. (And then selling them.) Given (a) that it’s the central bank and that it can print as many yen as it likes, and (b) that it would actually welcome a bit of inflation, there’s actually a non-negligible chance that this kind of non-sterilized intervention could work.”

With the yen quickly falling through the Y90 level to the dollar (although currently it is just above the mark,) the new Japanese government, which noisily said it wouldn’t intervene in currency markets, is already being tested, and they may be forced to backtrack on that particular notion, as Dow Jones’ Nick Hastings explains.