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I would not touch that beast this week until the china business get absorbed .. good luck .. you have big cat balls.
Dude not tonight ... in the future.
The Japs are gonna be selling USD instead of JPY. Why is that not good for you?
[23:50 NEWS: Japan Govt To Use FX Reserves For Foreign Remittances] Tokyo, Apr
2. Over Reuters. Previously, BoJ would give private banking institutions yen on
behalf of the government to be converted into foreign currency. USD will be used
instead under the new scheme. Japan"s foreign currency reserves total some $905
bln, mostly seen to be in USD. --Haruya.Ida@thomson.com
Oh boy here we go!
Low inflation a puzzle
By David Uren
March 12, 2007 12:00am
ALMOST every substantial economy in the world is enjoying good growth, low inflation and low long-term interest rates.
This happy state of affairs has developed alongside globalisation - the growing integration of world trade and finance - but the relation between the two is not clear.
There is an energetic debate among central bankers about whether globalisation is contributing to steady inflation or whether it is undermining monetary policy.
One of the puzzles in the Australian economy, thrown up by the December quarter national accounts released last week, is why inflation apparently fell at a time when consumer spending in an already capacity-constrained economy was growing at its fastest rate in several years and jobs growth was taking the unemployment rate to new lows.
The Reserve Bank has been arguing for some time there is little slack left in the Australian economy, creating a serious inflationary risk.
The former IMF managing director and head of the European Bank for Reconstruction and Development, Jacques de Larosiere, argues that globalisation has made inflation less sensitive to traditional measures of domestic capacity constraints, such as the level of unemployment, or business survey estimates of spare capacity.
In a recent speech, he said the increasing integration of the world's economies made "global slack" a better yardstick of inflationary pressure.
"When some 40 million low-wage earners enter each year into the world competition, one can understand that wages in advanced countries tend to show restraint."
He says this has allowed central banks to run an easy monetary policy that fosters growth without jeopardising price stability. Although there has been some increase in rates around the world, he argues they are not yet restrictive.
An IMF paper published last week describes integration of large sections of the labour force in developing economies into the world economy as a "positive productivity shock".
Not only has it broadened the sources of world economic growth, but it has also reduced input costs of many products, allowing companies in industrial countries to better contain spending while raising profits.
Both de Larosiere and author of the IMF paper, Mohamed El-Erian, point to another consequence of globalisation: the elevated level of global liquidity, supported by creation of new financial instruments and intermediaries.
De Larosiere notes, for example, that securitisation has turned banks into originators rather than lenders, with the credit risk onsold to markets. This allows them to "rotate" their balance sheet, feeding much more rapid credit creation. Similarly, credit derivatives allow banks to buy protection for their loans, freeing regulatory capital for new lending.
These arguments sit well with US Federal Reserve chairman Ben Bernanke's contention that it is the recycling of Asian and OPEC current account surpluses that has taken long-term interest rates around the world down to a real (after inflation) level of around 2 per cent and compressed the premium charged for risk to a point where it practically disappears.
Some see the compression of margins as part of the "great moderation", in which the improved transparency of monetary and fiscal policy around the world has reduced volatility both of markets and macro-economic variables.
RBA head of economics Malcolm Edey says that in the current decade Australia's GDP growth and inflation have only been half as variable as they were in the 1980s. The same is true in other countries.
De Larosiere sees the compression of risk margins as a product of a "monetary illusion", in which markets pledge their hope in low long-term rates being a harbinger of low short-term rates.
When the illusion is eventually shattered by rising short rates and an economic slowdown, the result could be ugly. Evidence of the illusion is the way futures markets in the US and, over the past week, in Australia have started pricing in rate cuts, when the central banks in both countries say their bias is towards further tightening.
El-Erian says central banks used to gain insights from market measures such as the shape of the yield curve and the level of various risk premiums, but traditional models have become less effective in explaining developments and predicting the future.
He argues this has made policy reactions more tentative, while markets have taken a "hesitant and bumpy path" to pricing the new global realities.
Bernanke is less convinced about the influence of globalisation. He does not accept that the inverse yield curve has had any influence on the conduct or efficacy of monetary policy or led to big changes in the processes that determine the US inflation rate. In a speech last week, he said the Fed funds rate still shaped the cost of holding inventory, which was an important lever on economic activity. Although world financial markets were increasingly interdependent, with much tighter correlation between long-term yields in the major industrial countries, he said the Fed retained leverage over longer-term rates and key asset prices.
"Because long-term nominal interest rates can be viewed as the sum of a weighted average of expected future short-term nominal interest rates plus a term premium, Federal Reserve policies and communications substantially influence the behaviour of these rates."
While it was true that the price of imported Chinese manufactured goods was coming down, the cost of raw materials was going up. In any event, the direct influence of cheaper Chinese manufactured goods would lower US inflation by only 0.1 per cent.
He said researchers did not agree about whether "global slack" influenced domestic inflation rates. A Bank for International Settlements study of 16 countries over a 20-year period to 2005 found the global output gap (the difference between actual and potential production) had a significant influence on domestic inflation.
However, Fed researchers had challenged this finding, saying it did not survive modest changes in the analysis of the output gap.
"Effective monetary policy making now requires taking into account a diverse set of global influences, many of which are not yet fully understood," he said.
http://www.news.com.au/business/story/0,23636,21363910-521,00.html#
Well ... lets see.
What if ... what if ....
China really does buckle under the pressure and revalues the Yuan and in turn the Yen (Since it is a proxy for the Chinese currency).
Now the million dollar (pip)question remains:
Will the crosses follow or will it only be a USD/JPY move?
I am getting a HUGE deja vu because I am absolutely certain we talked about this exact thing (gotta look at the old posts)
IF EUR/USD,GBP/USD, AUD/USD, NZD/USD all keep goin up then yeah it will be a USD/JPY move.
So what will it be cat? will all the currencies strengthen against the US or just the JPY?
What if the US (and it's economists) know something that China does not? What if China's economy is on fire and has to be cooled down and fast by outsiders because the Chinese don't know shit about rapidly expanding economies and are not moving FAST ENOUGH to control the problem of inflation?
Is the USA evil or good? LOL!
Japanese Yen TIBOR rates
Tokyo Interbank Offered Rate (TIBOR)
I should have posted the link sorry.
http://www.zenginkyo.or.jp/en/tibor/index.html
http://www.dailyfx.com/story/special_report/special_reports/Dollar_Slips_as_US_Imposes_1175273534426....
Any Retaliation by China to be Dollar Negative, Yen Positive
Instead, China may decide to retaliate by diversifying some of their big war chest of foreign exchange reserves away from the US dollar. The biggest beneficiaries would be currencies such as the Japanese Yen, Euro and British pound.
This tells me that the Americans want their dollar to depreciate against the Yen and in fact all other currencies.
What the US wants the US gets and all the others are just puppets controlled by the master of puppets. Charming!
My master is trying to potty train me but i slip up now and then.
The Tankan is gonna tank the carry trades! lol!
http://www.dailyfx.com/story/dailyfx_reports/cross_markets_data_reaction/Japanese_Yen_And_Equities_H...
Here is more info on the trade tariffs .... ooooooo .... glossy paper .... china is scared ....
http://www.dailyfx.com/story/strategy_pieces/weekly_option_strategy/Bush_Administration_Shocks_Marke...
Actually I was talking with a friend of mine from France and he told me that there was HEAVY investment in China regarding paper mills. They cost a small fortune to build and they last over 100 years. So if this much investment was done then it might actually hurt China.
I think this is the beginning of something big. First the hostages in Iran and now this. The pieces of the puzzle are being laid out slowly in front of us.
I am off to wikipedia to study protectionism and historical events related to that. Man I love this shit! It is like a good mystery novel.
What LIBOR rates do you look at? The BBA ones or the overnight rates (repo) that the Bank of Japan releases? I understand that the BBA ones have been around for a long time and are well respected. They are released with a one week rolling delay however. Do you know where we can get the LIBOR rate on a daily basis for the JPY?
LOL! I got first post! I could never do that on slashdot!
http://www.investorshub.com/boards/read_msg.asp?message_id=18370489
First post!
Dude they are taxing paper. Baby steps ...
http://www.forbes.com/business/2007/03/30/china-trade-tariffs-biz-wash-cx_bw_0330china.html
... excessive borrowing was a bigger risk in Europe than any repeat of the subprime mortgage crisis in the United States ...
UPDATE 1-IMF's Rato sees risk of mkt tumble from imbalances
Fri Mar 30, 2007 5:52 AM ET
(Adds quotes, merges earlier stories)
MADRID, March 30 (Reuters) - There is a serious risk of a correction in world markets unless global imbalances are checked, International Monetary Fund Managing Director Rodrigo Rato said on Friday.
At a financial meeting in Madrid, Rato said the United States needed to boost its savings rate while China needed to increase domestic demand.
"There are serious risks that could affect the world economy. If economic measures are not taken to reduce imbalances between investment and savings it could be the markets that will take action on prices," he said at a financial meeting in Madrid.
But Rato also said that there was a risk that rising protectionism could cut world productivity growth.
Market jitters have been heightened in recent weeks by problems in the U.S. subprime mortgage sector, which lends to borrowers with poor credit histories at higher interest rates.
Rato said excessive borrowing was a bigger risk in Europe than any repeat of the subprime mortgage crisis in the United States.
"More than thinking that (the subprime problems) could be reproduced, I believe we need to be aware that excesses in credit growth need to be watched," Rato said.
He added that "more neutral" interest rates would be beneficial to Spain, the euro zone's number four economy.
http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-03-30T095244Z_01...
and here:
http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-03-30T105230Z_01...
===============================================================
This credit growth is the reason that the stocks markets around the world have EXPLODED. I am trying to understand who will be the winner when the stock markets correct in a major way.
U.S. Foreclosure Filings Rise 12 Percent in February (Update3)
By Bob Ivry
March 26 (Bloomberg) -- U.S. foreclosure filings last month jumped 12 percent compared with a year ago as owners struggled with declining home values and higher adjustable mortgage rates.
More than 130,000 homes entered foreclosure last month, according to a report from RealtyTrac, an online listing of foreclosed properties. That's the second-highest since RealtyTrac began collecting data in January 2005.
The worst housing slump in more than a decade is pushing down home prices and hampering the ability of owners to refinance mortgages. Borrowers with poor or incomplete credit are also vulnerable to mortgages that are resetting at higher rates than introductory or so-called teaser rates.
``The rise in foreclosures over the past year probably only marks the beginning of the problem,'' Jan Hatzius, a Goldman, Sachs & Co. economist, wrote in a March 23 report. ``The main reason to expect further deterioration is that house prices are likely to fall significantly in 2007, with further declines possible in subsequent years.''
Foreclosures in 2007 may rise by one-third compared with last year should rates continue at the level seen in January and February, RealtyTrac Chief Executive Officer James Saccacio said in a statement today.
New Home Sales Fall
The foreclosures may further swell the number of unsold homes. New home sales in the U.S. unexpectedly fell last month to the lowest level in almost seven years and the supply of unsold homes climbed to the highest in 16 years, the Commerce Department said today.
The Standard & Poor's measure of the largest U.S. homebuilders slid as much as 3.1 percent after the government report. Purchases dropped 3.9 percent to an annual pace of 848,000 last month, less than the gain to 985,000 forecast by economists in a Bloomberg News survey.
One in every 884 U.S. households moved into the foreclosure process, which can range from default notices for late payment to auction sales and bank repossessions, Irvine, California- based RealtyTrac said. Banks typically start foreclosing after payments are 90 days late.
On a month-to-month basis, foreclosures are slowing. The rate at which homes were entering foreclosure decreased in February by 3.9 percent from adjusted January numbers, RealtyTrac said. In January, 136,113 homes entered foreclosure.
Florida Foreclosures
Florida reported 19,144 houses entering the foreclosure process in February, the most of any state, RealtyTrac said. It was followed by California, with 16,273, and Texas, with 12,386.
Nevada posted the highest percentage rate last month with one foreclosure filing for every 278 households. Nevada's rate was 77 percent higher than in February 2006, RealtyTrac said.
The state with the lowest rate was Vermont, with one foreclosure filing in February among its 294,382 households.
Washington, D.C. had no foreclosures, according to RealtyTrac.
Interest rates on about $775 billion worth of subprime loans -- those given to borrowers with bad or incomplete credit -- are scheduled to rise in the last nine months of 2007, according to Bear Stearns Cos.
Median Prices
The median U.S. home price was $212,800 in February, 1.3 percent less than a year ago and down 7.6 percent from a record in July.
One-fifth of home loan borrowers have adjustable rate mortgages, according to Credit Suisse Group. About 15 percent of the $9.5 trillion U.S. mortgages are subprime, according to Bear Stearns.
``People who bought homes in the 1980s and 1990s started refinancing their equity out in the 2000s, so we can't assume that foreclosures will only affect people who bought their homes in the last couple of years,'' said Schahrzad Berkland, who publishes the California Housing Forecast in San Diego. ``And a lot of adjustable-rate mortgages were taken out by prime borrowers, so we can't assume that the more qualified borrowers will be immune to losing their homes.''
Most homeowners who enter the foreclosure process do not lose their homes, said Rick Sharga, vice president for marketing at RealtyTrac.
``Of the properties that enter our database as initial notice of default, only 40 percent of them actually go to the auction,'' Sharga said in an interview.
To contact the reporter on this story: Bob Ivry in New York at bivry@bloomberg.net .
Last Updated: March 26, 2007 12:44 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aq53ihHYHRPc&refer=home
FINALLY!
http://www.bloomberg.com/apps/news?pid=20601087&sid=aazeuQEgRbBs&refer=home
The probability of a quarter-point rate increase in April was 44 percent from 47 percent before the report, according to an index calculated by Credit Suisse based on overnight interest-rate swaps.
Off to the Credit Suisse page!
[01:18 AUD/USD: RBA Credit Aggregates Important Ahead Of RBA Meeting] Sydney,
March 30: The AUD/USD has drifted down to 0.8060/65 on the back of some AUD/JPY
selling after the Tokyo Fix didn"t spark any cross buying. The RBA Credit
Aggregate data is released in a few minutes time with the market looking for
1.1% vs last month 1.3%. The number takes on more importance than usual with the
market pricing in around a 50% chance of a RBA hike next week. A strong number
might increase expectation that the RBA will pull the trigger next week rather
than wait for CPI data later in April. The AUD/USD trades 0.8065/70. --
John.Noonan@thomson.com
Anybody know where the they get that 50% chance of a RBA hike calculation?
I keep on seeing these percentage priced in comments for all the currencies.
I know where to get the US calculation .. anybody know for the aussie and kiwi?
Thanks ... been looking for weeks!
We gotta get an 8 screen setup like this. Pretty sweet!
OMG this is the funniest thing I have EVER seen.
Seriously though .... he actually knows what he is saying.
In this video he talks about market corrections till August-September.
The dude kinda looks like me ... he is hilarious!
Heads up for shorting the GBP!
Default UK current account preview
The fourth-quarter UK current account data will be released on Wednesday. During 2006 as a whole, the general trend was for a deterioration in the trade account with the annual deficit at a record level. The current account data, however, has been more favourable and resisted a further deterioration with the deficit slightly lower for the first three quarters of 2006. The third-quarter deficit of GBP9.4bn was equivalent to 2.9% of GDP.
The UK has recorded a stronger investment account position even though net overseas debt has continued to rise, the same pattern that has been recorded in the US over recent years.
Sterling will be vulnerable to significant selling pressure if the deficit is above GBP15bn for the fourth quarter as UK structural fears would intensify. A higher deficit would also be liable to lower GDP growth estimates and the revised fourth-quarter growth data will also be released on Wednesday.
Any upward revision to the GDP data would be a small positive for Sterling.
Glance sent me a new identity. I think it is kinda in your face. What do you guys think?
For sure. Did you see what happened when they raised to .5 and the ripple effect it had all around the world? There is no doubt in my mind the the old timers remember what happened in 1992 and actually traded through it. Japan WANTS to comply with what the rest of the world wants ie higher asian currencies but they cannot do it gradually as we witnessed recently. All these sob stories about the JAPS being scared they will go into deflation is complete bullshit. They are scared with what will happen to the equity markets all around the world.
They will try to raise gradually but mark my words .. they will not succeed! Fear and greed is a very powerful emotion that NOBODY can control. As soon as people sense that the asian currencies are going up in value there WILL BE a mass exodus and you will see huge moves. The central banks will be hard pressed to contain it.
The money supply for all currencies all around the world is at very high levels. The stock markets are reaching all time highs with all this cheap money going around. And I am not only talking US dollars , euros, yen , pounds you name it is is plentiful and cheap.
IMO there is a huge storm coming. I would be very wary of betting against the yen.
And this HUGE move will be to the benefit of the Dollar judging from all the information I have absorbed as of late. I have a strong feeling that Bernanke is gonna go on a hiking blitz to lower inflation once and for all for the near future (10 years).
Phew that was a close call! LOL!
Dude I gotta get you a spell checker ... it is spelled "Capitalist" I have my own page I see. Can I fill mine with pretty women? I need them when I trade forex.
I quit trading stocks for good. You can double your money in a day everyday. You can go long and short on a whim. You can also lose a whole bunch but with hedging strategies and currency correlations and the market correcting itself you can save your skin. I agree .. it is the best.
FORECAST 2007 Disinflation then Reinflation
http://www.financialsense.com/stormwatch/2007/0119.html
http://www.financialsense.com/stormwatch/2007/0201.html
A must read. Thank you Jim Puplava!
Yeah! even better!
Oh Man!! FXCM is in super big brown doodoo now. This time around they CLOSED TRADES! OMG! Mister lava must be fuming with his 300 000 account!
FXCM just margin called me for no reason and i cannot place any orders because the account is in margin call mode! what a bunch of idiots!
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Gold and the Dollar
There is divergence on the gold and dollar index chart.
I found this very interesting:
At B the index consolidates while gold continues to rise. The consolidation may be the start of an inverted head and shoulders or ascending triangle, but either pattern would only be confirmed if the index breaks through resistance at 92.5.
http://www.incrediblecharts.com/economy/gold_dollar.htm
Is this the beginning of a new era in history? Will the Americans start saving more and more? Will the treasury start reducing the money supply?
dog tearing up over here ...
you see how sad i am ?
The world stepped in because they were afraid that Hilter would conquer the world (he was getting close)... genocide was an after though. The USA's interests came first.
Just like europe went through many many wars (including WWI and WWII), the African nations have to also. I say LET THEM all destroy themselves so they can learn the lessons that Europe has learned THE HARD WAY. Have you seen the movie Black Hawk Down? Remember when the downed airman was talking with the African Warlord in Somalia? The warlord was asking why is America and the rest of the world poking their nose in affairs that they do not know anything about?? The Africans have to settle what they need to settle once and for all or else there will never be any peace.
As for Iran ... that is a very different situation because of the nuclear component. Is it only a handful of backwards thinking egotistical maniacs that are making all this commotion and brainwashing their people. They are one of the oldest civilisations ... the Iranians (Persians) have gone through many wars with the Greeks (a la Alexander the Great) and still have not learned their lesson!
Also keep in ming that they are unsolved differences between the Shiites and the Sunnis (http://www.understanding-islam.com/related/text.asp?type=question&qid=417) than need to get resolved. They were supposed to have resolved then during the Iran/Iraq war but I guess they did not.
Even the USA had a huge civil war. I say let them fight it out once and for all but be careful because of the nuclear component.
The UN is between a rock and a hard place. Lets not be too hard on them. These are very very delicate and old situations.
Very good article that brings alot of good points to the table.
Americans are fixing their lending practices, americans are going to save more as promised to China by Paulson, they have the whole world on their side now with the Iran problem (These persians are fracking nuts), the housing market is gonna fix itself ...
There is no doomsday economic scenario ... besides the fact that the whole world WANTS the american consumer to keep buying their products.
It is a world economy, everybody depends on everybody else. The Euro might go to 1.3600 (highly doubt it) but soon after it's exports will suffer greatly and it will go back down.
The world always seems to accommodate the US. Whatever the US wants she gets.
Don't get trapped and get overly optomistic about the euro. It is not all about interest rates. Yield plays a large part in making the currency rise but ultimately it is ECONOMIC GROWTH that wins.
Existing Home Sales were great today ... italian and french retail sales were shit. Everything is pretty much balanced right now but I agree that the sentiment is USD bearish because of the mess Greenspan created (very lax borrowing practices).
The USA is such a powerful economy and has the ability to absorb many shocks. If the economy stays the way it is right now the USD will be in a great spot.
Keep your eye on the LiBOR rates and look at the COT charts. The eurO WILL TURN DOWN soon enough.
PS: Did you know Greenspan asks for $USD100 000 for each 1 hour speech that he gives. He is only looking out for himself. He is causing controversy so he can continue collecting the money.
http://www.dailyfx.com/story/dailyfx_reports/daily_brief/Euro_Driven_Lower_as_Consumers_117464558035....
The EURUSD drifted lower in early European trade today as the latest consumer data from the region, raised questions about the strength of the EZ consumer recovery. Consumer spending in both France and Italy contracted materially last month. French data showed a decline for the first time in 5 months while Italian Retail Sales fell much worse than expected, printing at –0.4% vs. 0.2% forecast. The drop in the Italian readings was the worst in nearly two years. The extent of the retrenchment surprised the currency market where most of the players were under the impression that EZ consumer spending woes were no longer an issue for the worlds second largest economy. The persistent weakness in EZ consumer demand stands as a strong counterpoint to the robust economic growth amongst the regions’ producers and highlights the imbalances still present in the system.
That unhealthy dynamic was not lost on ECB policy makers. Sovenian Central Bank Governor Mitja Gaspari addressed the issue indirectly today when he stated that it is premature to talk about more rate increases noting that current interest rates are “appropriate”. Clearly the ECB has decided to observe how well the EZ economy digests the most recent series of rate hikes before imposing any additional tightening on the market. Therefore, with consensus now coalescing around May as the earliest possible date for the next ECB rate hike, the euro came under more profit taking pressure as traders saw no immediate catalysts for further gains to the unit.
Did you see the EUR trade balance last night?
Actual Forecast
1.3B 2.3B
Whenever the EUR gets too high exports will suffer.
The Euro depends on exports and most of them go to the US.
Do you honestly think they will let the EUR appreciate and let their exports decrease further and further and further because of less and less demand from the americans.
Look at the weekly COT charts and you will see that the EUR will TURN DOWN soon.