| As world economies get depressed from the ripple effect of US ...
The US Dollar is forming a long term base. The major US rate cut is behind us. It is time for the ECB to cut rates. The Bank of England will also cuts rates. The economic depression in US and financial meltdown is already built into US Dollar index. The next wave of rate cuts will start in Europe. The Chinese and the Indian currencies will appreciate against US Dollar. But they are not part of the US Dollar index. Other than Yen, all the currencies may fall against dollar in the several years. A very long term bottom is in place in US Dollar. The Dollar index currently trades around 75.50. It can rally 15% in the next nine months to reach 87.00. While trading US Dollar index the best strategy is to opt for futures and options arbitrage. For example buying US Dollar index futures, selling an in the money call on the same and buying a distant put on the future can be ideal.
The Ex Ante Factor: Bizarro World
The week of January 21-25, 2008 will go down in the history books of financial markets and potentially society at large. We witnessed the largest financial debacle in history where SocGen lost $7b in index futures pushing stock markets to the brink of collapse (are we trying to one-up each other's debacles?), we received an historic 75bps inter-meeting ease from the Federal Reserve (to fix a bad trade in Europe?), the US government agreed to pass a stimulus package to head off a recession (borrowing $150 billion to save a multi-trillion $ credit bubble?) and to top it off 10YR treasury yields traded down to 3.30% just 30bps from the 2003 lows while the inflation sensitive gold contract traded at an all time high above $920/oz (is this bizarro world?). With all the debate regarding whether or not the US will enter a recession we took a look at the conflicting messages coming from the commodity and bond markets to see if we could come up with a conclusion and trading strategy.
Financial market jitters trigger precious metal gains
Thanksgiving celebration in the US kept the precious metals, and most other markets, in a muted mood yesterday with thin range trade the order of the day. The mood has changed this morning however as a sharp slump to record lows by the US dollar triggered rallies in gold, silver and platinum. EUR/USD hit 1.4970 as speculation further sub-prime/credit fall-out would force the Fed to cut interest rates, again reducing the appeal of the US currency. Ongoing Thanksgiving celebrations will again keep volumes on the light side and no economic data is scheduled for release. Energy price have softened a little this morning with NYMEX crude currently down 53-cents. Gold spent yesterday confined to a narrow band, trading between $800-805.25. The metal has sparked into life this morning though, rising initially to $810 in Asia before rushing to $815.70 in early European trade.
Asian shares close mostly down as Japan slides
Australian share prices closed down 1.6 percent despite strong gains on Wall Street overnight, amid fears for the global economy and concerns the market was due for a correction, dealers said. The benchmark S&P/ASX 200 index closed down 97.1 points at 5,981.6 points. The broader All Ordinaries index closed down 92.9 points or 1.5 percent at 6,054.4 points. "It defies logic, especially as there's a chance that the Fed could cut rates" later this month, said Ric Klusman, head of institutional trading at Aequs Securities. "I don't think the market has gone as low as it can go," said Andrew Sekely, head of Australian equities at Intersuisse. A total of 1.58 billion shares worth 5.67 billion Australian dollars (5.07 billion US) changed hands.
Mel Brooks' 'Young Frankenstein' is ready for its Broadway bow
Just because the musical aims for laughter does not mean the emotions aren't genuine underneath, notes Bart. "It's about a misunderstood father and a son seething with adolescent angst," says Bart, the father of two daughters. "On a certain level it's pretty serious. You can't treat that cheaply." "Sure, we're being funny -- I hope -- but that's because there is sincere emotional investment to what we do," remarks Hensley. "It's not only just about us getting the laughs. The characters really care about each other." "This isn't a buddy-buddy show like 'The Producers'," says Bart, who hissed around as Carmen Ghia in the original company of Mel Brooks' movie-into-musical smash before graduating to the leading role of Leo Bloom. "After all, our story here is about resurrection and somebody playing God," observes Bart, tongue not entirely wedged in his cheek.
Obama: Beware 'Reverse Bradley'
He has to lose to Bill Richardson to be in trouble? ... Update: Politico's Josh Kraushaar has some standards ("at least a strong second-place performance")! ... 5) Note that Richelieu, a McCain booster (even in the highly unlikely event that he's not Mike Murphy) predicted McCain would finish third with 17%--a "surging third." He came in fourth with 13%--a "disappointing 4th," wrote NBC's First Read, in an honest assessment you don't find many other places in the MSM. Somehow, the press never requires McCain to actually match the "comeback" hype it generates about him. ... **--I once speculated that Harold Ford might benefit from a different kind of Reverse Bradley effect in his Tennessee senate race, in the form of conservative white voters who don't want to admit to their buddies or to pollsters that on the secret ballot they were going to vote for the black Democrat.
Fed slashes US rates in emergency action
The DOW gapped down sharply this morning, recovered, and is again falling; because the fundamentals continue to get worse, like SP4's native intellect. The discussion has moved from 'recession' to 'bear market', since there's now a complete lack of confidence in the paper that banks and other institutions hold, and banks do not even lend to each other. The Northern Rock deal in Britain is a saver for them, but the problems are far from over, with many foreclosures due for 2008, and buying power sapped by lower home values and upcoming mortgage rate increases. SP4, just shut up. You're tolerable as the daily jackass in normal times, but now you're just a leaky faucet - drip, drip, drip. Report this comment .
London shares up midafternoon, but off highs, as Wall St declines ...
LONDON, Feb. 14, 2008 (Thomson Financial delivered by Newstex) -- Leading shares pared gains in midafternoon deals, dented by a negative start on Wall Street as Fed Chairman Ben Bernanke faced Congress on the state of the US economy, but with Diageo topping the UK blue-chip leaderboard after pleasing first-half numbers. At 3.15 am, the FTSE 100 index was 19.3 points ahead at 5,899.4, while the FTSE 250 index took on 111.8 points at 10,107. Volume was solid, with 1.7 bln shares changing hands in 563,510 deals. Across the pond, Wall Street traded negative in early deals after a big rally yesterday and as comments filtered out from Federal Reserve Chairman Ben Bernanke's congressional testimony. The Dow Jones Industrial Average fell back 40.00 points to 12,512.20, while the Nasdaq Composite lost 9.45 to 2,364.09 and the S&P 500 slipped 4.05 lower at 1,363.15.
Canadian convoy hit; 37 Afghan civilians dead
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