Thursday, September 13, 2007

Dollar = Confetti?

Dollar = Confetti? That´s the not so serious question Mike Larson is asking. With the US$ Index hitting new historic lows and a nasty US recession in the cards i wanted to bring up this cover from 2004. It looks like the Economist will have multiple years to reuse this image.....Here the US$ Index since 1971 / Chart that shows how significant the break of the 80 level was....

Dollar = Confetti? Das ist die provokante und nicht ganz ernst gemeinte Frage die sich Mike Larson stellt. Da der US$ Index nun täglich neue Tiefen erreicht und eine üble US Rezession unterwegs bzw. schon da ist kann ich mir nicht verkneifen dieses Cover aus dem Jahr 2004 zu posten. Es sieht ganz so aus als wenn der Economist das noch einige Jahre wiederverwenden kann...... Hier der US$ Index Chart seit 1971 der eindrucksvoll zeigt welche jahrentelenage Unterstützung in den letzten Tagen aus dem Markt genommen worden ist......

It is nice to see that Fundamentals Matter (In The End..) / Cartoons :-). And it doesn´t help when on top of this there is a massive capital flight from US investors out of the Greenback as shown here and here

Es ist beruhigend zu wissen das harte Fakten (Cartoons) am Ende doch zählen:-) Es ist auch nicht gerade hilfreich (aber wenig verwunderlich) wenn zusätzlich eine nie dagewesen Kapitalflucht aus dem Greenback von Seiten der US Investoren ( siehe hier und hier) einsetzt.
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Blogger jmf said...

Yves Smith from Naked Capitalism makes a good point about the "cheerleading" WSJ.

Why they complain about Murdoch is beyond me...... The reporting is already subprime.....

Bank of England's Tough Position Absent From the Wall Street Journal

One of our forms of recreation is keeping an eye on how coverage of certain news stories in the Wall Street Journal is curiously different than elsewhere. We've noted before that the WSJ tends to put a happy face on economic and market news ....

The latest reporting disparity comes with the written submission to Parliament by Mervyn King, the governor of the Bank of England. The document, which took a tough position against providing liquidity because it would bail out speculators and might not prove to be necessary, was covered by the Financial Times, Bloomberg, and even the New York Times, yet got no mention in the Wall Street Journal (only a short post in its MarketBeat blog, which is not the same as putting it in the paper).

Now why is this story missing from the Journal? One might conclude that the Journal is unwilling to run any serious story that takes issue with the idea of a rate cut.....

It appears that the Journal, like Greenspan, doesn't want to upset the markets.

1:44 AM  
Anonymous Anonymous said...

Goldman Global Alpha Fund Fell 22 Percent in August:

"With losses this large, typically you have to look at the return potential going forward," said Gregory Dowling, vice president for alternative investments at Cincinnati-based Fund Evaluation Group LLC, which doesn't have money in the Goldman fund. "If there isn't a possibility of a snap-back, you have to examine where else you can put that capital."

Yes, I guess you have to -- whatever captial is left. Good idea.


2:41 AM  
Blogger jmf said...

Moin Eh,


It takes time to change the minds from "buy the dip" to "preserve capital"

I think lots of "players" will learn this the hard way.....

2:47 AM  
Anonymous Anonymous said...

After losing 99% of his investment Greg began to question whether maybe he should try a different strategy... LMAO!

2:59 AM  
Blogger jmf said...

The Pound could be next....

U.K. House Prices Decline for First Time Since 2005

U.K. house prices fell for the first time since 2005 in August after five interest-rate increases in the past year discouraged buyers, the Royal Institution of Chartered Surveyors said.

The number of real-estate agents and surveyors saying prices declined outnumbered those reporting gains by 1.8 percentage points in August, London-based RICS said. That's the first negative balance since October 2005. Prices in the capital rose at the slowest pace in more than two years

3:36 AM  
Blogger jmf said...

Euro hits new high vs. dollar, also at 1-year peak vs. pound

The euro on Thursday rose to a new record high vs. the U.S. dollar and also reached a new one-year peak vs. the British pound. The euro rose as high as $1.3927, before edging back to $1.3896 from $1.39 late Wednesday, as traders contrasted hawkish comments from the European Central Bank with expectations of U.S. interest-rate cuts next week. The euro rose to as high as 0.6875 pounds, after a survey showed the first negative reading of a U.K. house price gauge in more than two years. The dollar rose 0.5% at 114.83 yen

3:40 AM  
Blogger jmf said...

From my favourite Bloomberg reporter
Ease Money-Market Crisis by Letting Banks Go Bust: Mark Gilbert
The correct number of banks to fail when a credit bubble bursts is not zero. If the best way to avoid the mispricing of risk in future is to sacrifice some of the less-prudent lenders on the altar of liquidity, then let the culling commence. That is especially the case if it erases the perception that central banks will always act as lenders of last resort, even to institutions that don't deserve to survive.

4:05 AM  
Blogger jmf said...

Bank of England Relaxes Deposit Restrictions to Spur Lending

The Bank of England relaxed restrictions on the amount of money financial institutions need to hold with the central bank, encouraging them to lend more to each other as it tries to reduce overnight borrowing costs.

Commercial banks, which agree to hold a specific amount of money at the Bank of England at the end of each month-long maintenance period, can now undershoot that target by 37.5 percent and still earn interest at the benchmark interest rate, the central bank said today. That compares with a previous restriction of 1 percent.

``They've been more generous than we thought,'' said Philip Shaw, chief economist at Investec Securities in London, who expected the bank to widen the range to 26 percent.

The Bank of England also loaned additional money to commercial banks today as part of its efforts to reduce overnight interest rates which are still ``higher than normal.''

Governor Mervyn King yesterday refused to change the system for money- market operations or take action to ease rates over a longer time horizon because that would ``encourage excessive risk-taking.''

Not quite a flip flop from the BOE but at least they blinked....

4:47 AM  
Anonymous Anonymous said...

Hi jmf,

Yeah, that's the way to play hard ball, cut the reserve requirement. That'll teach 'em. LMAO again!

5:22 AM  
Blogger jmf said...

Moin Edgar


At least the BOE can still use this "tool".

Thanks to Aaron i have learned that the
Fed has already eliminated the requirement

5:34 AM  
Anonymous Anonymous said...

Hi again,

Yep, no reserve requirement. I don't know why anyone outside the U.S. would hold dollars. I live inside the U.S. and I detest them.

5:52 AM  
Blogger Harleydog said...

JMF be careful with the dollar, with so many bears,coupled with notoriously contrarian magazine cover indicator. Just a thougtht.

9:49 AM  
Blogger jmf said...

Moin Harleydog,

the cover is from 2004.

I have no position in the $.

I play the weak $ with gold and the goldmineres/HUI and i´m short the pound.

The pound trade looks less "crowded" :-)

I agree that in general that the sentiment is almost 100% percent against the $. But for very good reasons....

The majority is still thinking that the recession probability is only at 35%... I think it is 100%

10:58 AM  

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