World Gov’t Buy-Out
The nations of the G-7 waited for the best possible
moment to apply a tried–and not-so-true–tool in the arsenal of global policy
makers–intervention. What better opportunity than when Intel warns it will not meet earnings
expectations and blames the short fall, in part, to the weak euro that has
slowed sales?Â
Government intervention in currency markets has proved to
be ineffective–except in rare cases–in determining the value of a currency
over the long run. A coordinated effort, like Friday morning’s group effort by
the G-7 to prop up the euro, is the most effective approach, but European currency
futures have given back gains, heading straight south since the futures opened
in Chicago. One of the reasons the market may be skeptical is that the central banks
did not provide details about the degree of the intervention or the amount
spent.Â
The euro FX
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Nasdaq futures opened down 92, their limit, imposing
trading curbs which halted trading below 92-down for the first 10 minutes.
Intel’s negative earnings warning was the culprit and the stock was down as much
as 16 on the opening. Looking for a bottom. The Nasdaq 100’s
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PowerRating) 213-point down-open coincided with the 50%
retracement of the May 24 low–September 1 high. We’re up 50 points off the
bottom, and that key retracement figures, with 10 of the Naz’s big cap trading
in the top quartile of their early ranges (all gapped down).Â
Energy contracts are treading water and moving lower due
to some relief selling on White House overtures to alleviate the tight supply situation
by making oil available from the US Strategic Reserve.Â