Axel Merk Questions…Great Job From All…Our starting point for analysis

Prior to our recent Axel Merk client roundtable, we shouted out a request for questions for the event. As a thank you and a template for our discussions coming soon, I wanted to post the questions we received…so thank you, and here are your questions:

Regarding Currency markets:

• What are the Volumes and Size?
• Are currency markets Efficient?
• What is the approximate number of tradable currencies?
• What makes a currency rise and fall?

I’m interested in how the financial industry perceives the ability (or lack thereof) of the United States’ educational system to produce graduates with sufficient math and science skills for the 21st century. 

How is this limitation perceived with respect to our competitive position in the global markets especially as the US continues to slide relative to other emerging competitors such as China.   Most important of course is what can the financial industry do to push the US Education system into action.

What is Japan doing? Will it work? What are possible peripheral effects and damages? How high a probability does the US have of becoming the next Japan?

What is the US doing? Will it work? What are possible peripheral effects and damages? Any idea on the impact Fed’s QE programs has had on 10 year treasury rate? I.e. without their buying so much what would the 10 year rate be right now all else equal? Interest rates, where are they going? Given we have seen how Japan has turned out over the last 15 years, can the US use as a road map to avoid the problems they have faced? What prevents Bernanke from getting it right? Just because it hasn’t happened before why can’t we do it this time?  Is US market further along the progression of economic improvement than other foreign countries?  The Fed indicates it will reduce its bond buying in 2013 and end it in mid 2014.  They forecast growth of 2.6% this year and 3.5% in 2014.  Will growth of 3.5% accelerate corporate profits and therefore the stock market in 2014?  Do you see a DOW 16,000 by the end of 2013?  Unemployment is expected to fall to 6.5% ending 2014.  Will the Fed raise the threshold benchmark lending rates and with what effect on the economy? History indicates the market rises most of the time when interest rates are rising because the economy typically is improving, is that your scenario?

 Are there valuable, applicable lessons to be learned from nations ( such as Norway ) who have sound finances for the United States and other indebted nations, which could enable both to become debt free? If so, what impact would likely occur?

Is it a wise business decision for America to continue to give to other countries when our government must first borrow then owe interest to so give? Also, are there not countries who owe us? If so, does our government seek to recoup these monies and thereby help to reduce our indebtedness?

Which Global Economies are strong, weak and what are the effects? Are we going into or out of a global slowdown/recession?  Expectations for US and Foreign markets through remainder of year? Is Europe running in tandem with the US economy or will foreign trade drag the US recovery?

With a finite amount of gold, can it ever truly be used as a world currency?

Yes…we asked for questions and you all delivered…Well Done pat yourself on the back!! We will address these and others soon.  We have answered a few already in the Q 3 2012 Newsletter, but will dive deeper over the remainder of the summer. Thanks so much again !!

John Kvale