^{Is it possible to demonstrate hope even when you feel somewhat pessimistic about the future?  If you are deeply concerned about the direction of our economy, the expansion of our government, and the tension that exists between countries, religions, and ideologies around the globe...does that mean you've given up hope?}

^{Sometimes people who express concern about the future and who recommend living in a state of preparedness can get labeled as having a "bunker mentality."  I reject the bunker mentality and instead encourage individuals and churches to embrace the call "prepare to share."}

^{Preparation is not just about having enough food, water, and other essential items for yourself, but also enough so that you can share with those around you who may be in need.  In doing so, we can demonstrate our love for our neighbors as well as be a good testimony for Christ.}

^{I have written an article entitled "Hope and Optimism" that explains how we can maintain our hope for the future even though we have a less than an optimistic view of the near-term future.  Click here to download a .pdf copy of the article: http://www.globalperspectives.info/images/pdf_files/hopeandoptimism.pdf} 

^{The latest Global Perspectives class filmed this week is now available at http://www.fbcmarco.com/classes/index.php?class=Global%20Perspectives.}

^{How do you guard against both the deflationary forces of America's worst recession since the 1930s and the vigorous response of the Federal Reserve, which has in effect cut interest rates to zero and rapidly expanded its balance-sheet?  On May 4th, Paul Krugman, a Nobel laureate in economics, gave warning that Japan-style deflation loomed, even as Allan Meltzer, an eminent Fed historian, foresaw a repeat of 1970s inflation--both on the same page of the New York Times. 1}

^{Neither option is a good one.  If we face inflation, the cost of everything goes up because the purchasing power of the dollar goes down.  IF we face deflation, the value of our debts stay fixed while prices, profits, and ultimately wages fall.}

^{Emerging economies such as China and Russia are calling for alternatives to the dollar as a reserve currency. The trigger is the Federal Reserve's liberal policy of expanding the money supply to prop up America's banking system and its over-indebted households.}

^{Because the magnitude of the bad assets within the banking system and the excess leverage of its households are potentially huge, the Fed may be forced into printing dollars on a massive scale, which would eventually trigger high inflation or even hyper-inflation and cause great damage to countries that hold dollar assets in their foreign exchange reserves.}

^{China is aware that it must become independent from the dollar at some point. Its recent decision to turn Shanghai into a financial centre by 2020 reflects China's anxiety over relying on the dollar system. The year 2020 seems remote, and the US will not pay attention to something so distant.}

^{However, if global stagflation takes hold, as I expect it to, it will force China to accelerate its reforms to float its currency and create a single, independent and market-based financial system. When that happens, the dollar will collapse.2}

^{Demand in the US "may be stabilizing" Ben Bernanke said on Tuesday, in guardedly optimistic remarks that suggest the recession is likely to end this year.} 

^{The Fed chief emphasized that the evidence of stabilization was "tentative" with better news on the consumer front set against extreme weakness in business investment. "We are likely to see further sizeable job losses and increased unemployment in the coming months," he warned. Recovery would "only gradually gain momentum" and economic slack "will diminish slowly".}

^{Nonetheless, Mr. Bernanke said he thought unemployment - now 8.5 percent - would not reach double digits, as some economists feared, and would instead peak "somewhere in the nines".3}

^{The unemployment rate, however, soared to 8.9 percent, the highest since September 1983, from 8.5 percent in March and job losses in March and February were a combined 66,000 steeper than previously estimated, the Labor Department said.  A big 72,000 jump in government payrolls tempered the overall job-loss figure. Private sector employment fell by 611,000 in April after a 693,000 job decline in March.4}

^{Yet, this powerful rebound does not sit easily with the still woeful news flow of poor economic data, deteriorating company results and the threat of another pandemic - this time swine flu - that could match the SARS crisis of 2003. Even news on Thursday that car giant Chrysler was about to file for Chapter 11 did not significantly undermine the new mood of optimism.}

^{Richard Batty, investment director at Standard Life Investments, says: "We have not bought into the eight week rally because we are still worried about structural issues. We think the markets will remain volatile and move sideways."}

^{"We are not convinced the economic data are strong enough yet to suggest we are out of this downturn," he says. In other words, it could be a case, to quote the market cliché, of  "sell in May and go away". 6}

^{Stephen Hester, Chief Execute of the Royal Bank of Scotland said, "I have to tell you, I am not seeing green shoots in this regard. We do expect the next two years to be very difficult for the market and for RBS and we think it's very important that people do not get carried away in the short term with over-optimism, at least as it relates to our business."7}

^{Israeli Prime Minister Netanyahu spoke via satellite to a policy conference sponsored by the American Israel Public Affairs Committee this week where he said, "There is something significant that is happening today in the Middle East, and I can say that for the first time in my lifetime, I believe for the first time in a century, that Arabs and Jews see a common danger....}

^{The common danger is echoed by Arab leaders throughout the Middle East; it is echoed by Israel repeatedly; it is echoed by Europeans, by many responsible governments around the world.  And if I had to sum it up in one sentence, it is this: Iran must not be allowed to develop nuclear weapons."}

^{Senator Jon Kyl (R-AZ) gave an excellent but sobering address following the Prime Minister. He warned that "Pakistan could fall to the Taliban in the next six months," and that the country's 100 or so nuclear weapons could fall into the hands of Islamic Radicals even before Iran gets the Bomb. He noted that the government, police and military in Pakistan seem "almost powerless" to stop the Taliban Radicals.8}

^{The Obama Administration has signaled a tougher approach towards Israel ahead of fresh talks on the Middle East peace process by insisting it must endorse the creation of an independent Palestinian state.}

^{"Israel has to work toward a two-state solution," declared Vice-President Joe Biden..."You're not going to like my saying this," he warned the American Israel Public Affairs Committee (Aipac) before adding that the Jewish state should not build any more settlements on Palestinian territory, and should "dismantle existing outposts and allow Palestinians freedom of movement".}

^{Mr. Biden used his speech to reiterate that the US would never abandon its commitment to Israel's security and that "nothing is off the table" with Iran -- a phrase often used to imply that military action against uranium enrichment facilities remains possible.9}

^{The New York Times reported today that "senior American officials say they are increasingly concerned about new vulnerabilities for Pakistan's nuclear arsenal." Eighty-seven percent (87%) of U.S. voters are now at least somewhat concerned about the security of nuclear weapons in Pakistan as the radical Islamic Taliban continues to make gains in that country. Sixty percent (60%) are Very Concerned.10}

^{The World Health Organization said Thursday that up to 2 billion people could be infected by swine flu if the current outbreak turns into a pandemic. The agency said a pandemic typically lasts two years.}

^{WHO flu chief Keiji Fukuda said the number wasn't a prediction, but that experience with flu pandemics showed one-third of the world's population gets infected.}

^{"If we do move into a pandemic then our expectation is that we will see a large number of people infected worldwide," Fukuda said. "If you look at past pandemics, it would be a reasonable estimate to say perhaps a third of the world's population would get infected with this virus."11}

^{Stocks zoomed this week as the Fed finally made the stress test results known. To no one's surprise, all the banks are considered solvent. I wonder how the tests would have come out if they still had to mark their toxic paper "assets" to the market value and not to some CFO fantasy number?}

^{The market is quickly approaching the all important 9000 resistance area. The 38% retracement of the entire decline is at Dow 9400. A market will generally try to retrace a minimum 38 %. That is why we put a target of 9000 on this rally.}

^{All economic numbers coming out are called less bad than the average guesses. After the implosion of job losses etc., one could expect the numbers to be less bad. As mentioned last week, the long-term rates are going higher and this is going to complicate the government's manipulation of interest rates.}

^{There was a failed bond auction for the 30-year bond on Thursday and rates went up dramatically. This is because people feel that inflation is coming down the road and they are selling their long-term treasuries. Foreigners are not buying them like we counted on in the past.}

^{If you have any adjustable rate, lock it in now! Eventually these rates will be a big negative to stocks, as it will thwart any meaningful housing recovery. We still have to deal with commercial real estate soon.}

^{The dollar plunged this week as China keeps bashing the US government's quantitative easing policy. This is a fancy term for printing money out of thin air. Foreign demand for US treasuries is sinking and along with it the dollar. Longer term, the dollar's fundamentals are awful.}

^{We have the largest debt in the universe and a trade and budget deficit as far as one dares to look. Eventually the dollar is going to plunge causing massive inflation. Notice that as the dollar comes down, all commodity prices are heading higher. This is because all commodities are priced in US dollars. With all the reflation the Fed is doing, you haven't seen anything yet!  Prepare yourself for what is coming.}

^{Gold prices were up $26 for the week. Silver had a much more dynamic run of $1.40. The metals should continue to do very well as the Fed tries to print our way to prosperity again.}

^{Many analysts are calling for gold to soon cross over into the $1000 area again. I want to keep focused on the longer term and prepare myself for the coming plunge in the dollar. That is when you will see real price appreciation.12}

^{1http://www.economist.com/opinion/PrinterFriendly.cfm?story_id=13610845}

^{2http://www.ft.com/cms/s/0/2f842dec-38d8-11de-8cfe-00144feabdc0.html}

^{3http://www.ft.com/cms/s/0/a30ee8b2-398a-11de-b82d-00144feabdc0.html}

^{4http://www.reuters.com/article/domesticNews/idUSTRE5472SK20090508}

^{5http://www.reuters.com/news/pictures/articleslideshow?articleId=USTRE5472SK20090508&channelName=domesticNews#a=1}

^{6http://www.ft.com/cms/s/0/eeecebd2-35b4-11de-a997-00144feabdc0.html}

^{7http://www.ft.com/cms/s/0/8c4366ae-3b96-11de-acbc-00144feabdc0.html}

^{8http://flashtrafficblog.wordpress.com/}

^{9http://www.timesonline.co.uk/tol/news/world/middle_east/article6229180.ece}

^{10http://www.rasmussenreports.com/public_content/politics/general_politics2/87_worried_about_security_of_pakistan_s_nuclear_weapons}

^{11http://www.breitbart.com/article.php?id=D981HHTO3&show_article=1}

^{12Market commentary provided by Mr. Steve Meyers of Grainbelt Commodities, Marco Island, FL.}

^Disclaimer

^{The statements, opinions and analyses presented in the articles and newsletters on this website are provided as a general information and education service only. Opinions, estimates and probabilities expressed herein constitute the judgment of the author as of the date indicated and are subject to change without notice.  Nothing contained in this website is intended to be, not shall it be construed as, investment advice, nor is it to be relied upon in making any investment or other decision.  Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. Neither GrainBelt Commodities, LLC. nor Steven R. Meyers shall be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided.}

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