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Posts by "ashraf laidi"
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Ashraf
Hamish,
coordinated rate cuts are more likely to be USD-positive because they would suggest the beginning of further easing by the Europeans while US easing may be closer to the end. Yes, the JPY is indeed strengthening. Look how USDJPY is falling. Look how USD is doing badly against JPY but much better against EUR, GBP, AUD etcc. The moves are evident.
Ashraf,
I am perplexed ! If eur,gbp,usd central banks agree to cut rates in a package deal, where does this leave the usd ? Surely down versus eur & gbp ? Gold stocks & aud are crashing. The US economy will surely be in dire straits ? Yet despite yield curves the money still flows to the almighty dollar. Why ? I would of thought that by now the jpy,yen & gold would have spiked to new highs........................Hamish
The eventual passing of the US Treasury/Congress rescue package will surely trigger an initial rally in US stocks and reaccelerate carry trades at the expense of the yen. But the million dollar question is FOR HOW LONG? later this week , we'll get the ADP private jobs data (Wed), followed by the big US JOBS REPORT on Friday, which is expected to show a drop of at least 100K. There's also the ISM on Wed. Can we imagine the market reaction to this reports? Ive said many times and Ill say it again: THE RESCUE PACKAGE IS NOT AN ANTITODE TO THE SLUMPING ECONOMY. It ONLY relieves banks of their debt burden over the LONG TERM. So, any resuling yen decline from the rescue announcement is likely to be a good buying opprtunity.
3 months ago, people used the same argument you make; rates are too low and any more rate cuts spur further inflation. people's (and the Fed's) priorities were way off. Ive warned all along that as the credit market stress turns to turmoil and a standstill in banking confidence, the already weak economy will take a deeper hit, in which case, DOWNSIDE RISKS WILL OVERWHELM UPWARD PRICE PRESSURES and there goes away inflation. And this is exactly what's happening. inflation is DOWN and economic contraction is HERE. The Fed must make a shock slashing of interest rates, rather than over $1trillion in liquidty injections since summer 2007.
And by the way, did you kno that in 2003, Fed cut rates to 1.00%. Things were nowhere as bad as now and now rates are 2.00%.
Hope this clarifies it.
Futures magazine can be found in most bookstores in the US, but not sure about Dublin. The shorter version of this can be found on this site in articles 2 weeks ago TITLE: "implications of gold rise relative to oil". There's more extensive analysis about this subject (gold vs oil) and the relationship between equities and commodities in my book in Chapters 6, 8 and 9. See Table of Contents in book section of this site.
It depends what commodities we're talking about. as i argued often in this site and in this month's Futures magazine, gold will OUTPERFORM oil, as a result of prolonged central bank easing from US and other nations. Oil may remain weak but not fall off a cliff. Copper will be supported by improved demand and prolonged supply problems in Peru and Chile. As for food and agriculture, world demand will continue as the global slowdown varies around the globe. Eurozone, UK and Asia may slow, but the latter is surviving on intraregion trade. Commodities' overall rally has yet another 5-6 years according to historical cycles.
Certainly the IFO will be more pressing in determining the shortterm flow in EUR than any implications on European banks from the crisis. There's plenty of talk of surging leverage by European banks tied to US banks, but it is things such as i) IFO and ii) Buffet's interest in Goldman that will shape the thngs to come. Regarding the FX Futures flows, it makes sense that euro longs saw a sharp spike last week considering the moves in the cash market.
Regarding your wanting to long CADJPY based on further gains in oil, I would not jump on this trade due to the increased possibility of a BANK OF CANADA RATE CUT at the October 21 meeting. With the US economy increasingly strained, North of the Border is struggling across the board with the exception of oil driven Alberta. Yes, they did have a few stronger than expected job reports, but combining risk aversion, yen strength and US weakness, CAD may be in for some hard times.
WEELY CADJPY CHART looks technically toppish, with gains limited at 103, but ample downside room towards 100 and 99.30.
WILLIAMS % R looks BEARISH both in Daily and Weekly.