New Records are Not Good

This year has been a year of records. Here are some of the benchmarks we have hit in the three short months of 2008.

1) Gold rises above $1,000 an ounce:

Most-active April gold futures reached a new high of $1,001.50 on the Comex division on the New York Mercantile Exchange Thursday.

The metal has climbed steadily since 2001 after falling as far as $250s a number of times during the period from 1999 to 2001.

The several-year bull market accelerated rapidly since August after the Federal Reserve signaled it was easing monetary policy to shore up the economy amid worries about the credit markets due to sub-prime problems. In fact, to hit $1,000, April gold futures soared 50% since the Aug. 16 low of $666.40.

Hat Tip: WSJ

2) Oil first rises above $100, and now sits at a record $111:

Crude oil for April delivery rose more than $1 to hit $111 a barrel on the New York Mercantile Exchange in mid-morning trading. It was last up 85 cents, or 0.8%, to $110.77 a barrel. Crude has gained nearly $6 since Monday.

Crude prices, denominated in dollars, tend to rise when the greenback falls, as a weaker U.S. currency makes crude less expensive to buyers holding other currencies. It also eats into oil producers' dollar revenue and forces them to raise prices. The weak dollar is also pushing up prices of other commodities.

Hat Tip: Marketwatch

3) The Dollar falls to record lows against the Euro.

The euro has been on an upward trajectory since late 2001, but its rally has intensified since the credit crisis shocked financial markets last August and aggressive U.S. interest rate cuts sent dollar to record lows.

The latest, some say third, wave of the credit crunch in recent weeks has seen the dollar's broad decline accelerate and on Thursday the euro surged to records above $1.56 and the dollar broke to 12-year lows under 100 Japanese yen.

Policymaker protests are well underway.

Hat Tip: Guardian, Bespoke

4) The Dollar falls below ¥100 for the first time since 1995:

``Dollar-yen is going lower,'' said Ray Farris, head of foreign-exchange strategy at Credit Suisse in London. ``It will definitely overshoot our 98 forecast in the very near term. Our forecast was for the dollar to reach 98 in three months. The big question now is whether there will be intervention.''

Japanese officials are unlikely to intervene now in the foreign-exchange market because the yen is ``cheap'' compared with other currencies, Sakakibara said. The U.S. and Japan may intervene to weaken the yen should it break through 90 and head toward 80 per dollar, he said.

The yen's real effective exchange rate, measured against 15 currencies of major trading partners including China, Europe and Canada, is 99.5, according to Bank of Japan figures. The rate averaged 121.9 in the first quarter of 2004, when the bank last intervened on behalf of the Ministry of Finance.

Hat Tip: Bloomberg

5) Carlyle Capital becomes the next hedge fund implosion:

The credit crisis has claimed another victim.

Carlyle Capital Corp. said late Wednesday it expects its lenders will seize its assets, causing the likely liquidation of the fund, which until recently owned $21.7 billion in mortgage securities.

"Although it has been working diligently with its lenders, the Company has not been able to reach a mutually beneficial agreement to stabilize its financing," the fund said in a statement.

Hat Tip: WSJ