Posts by "speculator"

could the dip in cable be a new downtrend or buying opportunity? ashraf what do you think.

the steepening of the longer end of the yield curve is stocks negative as the cost of capital in the us becomes more expensive for corps and mortgage borrowers. this is likely to impact corporate profitability including personal borrowing costs as worsen the real estate market and bank profits. this could cause a possible inflow in to the short end of the yield curve with very short durations. this was maybe why the dollar rose due to risk aversion.

it is clear that the government bonds are pricing higher future inflation probably due to a combination of nearer term economic recovery and increase in the us money supply but i think mainly the later.

ta

ashraf thanks for you input,

looking at past cable levels, i believe we have not had a period where sterling rose sharply after lows and sustained its strength so rapidly for example looking at 2000-2003 and in the 80s - cable remained low for quite some years.

I do agree that we are in extraordinary circumstances and we cant always look at the past. but it would be unwise to rule out the bearish potential of the pound this year despite fundamentals hanging on the dollar.

dont worry i think theres quite a few people that are stunned with cable's rapid recovery.

if you ask me, the market is irrational at present and is again discounting quite a bit of bad news. but the further things overshoot the more they will tumble down. its pretty hard trading at the moment!

i think if equities start to come down it will be very gruadual and we certainly are not in a V shape recession so it will be very bumby indeed.

with Vix and Libor falling so rapidly its no surpirse that confidence is flowing in to equities and risk currencies. fundamentals remain rubbish but stocks dont always follow.

the markets seem to disregard PE ratios etc at the moment.

i do think we are still in a long term bear market and equities should start to be much lower in q3/q4.

in my opinion the following data would in order of importance impact $/gbp in the short term.

equities performance excluding emerging markets
banking sector shocks/financial scams/liquidity issues
Uk mortgage approvals
official house price moves
GDP
uk political instability

it seems that there has been just too much good date for the uk recently.

1 or more of the above need to become of a negative surpirse for a decent downtrend.

Ashraf would i be correct?