World economy talk

[tidus1203]

Happy 3rd anniversary GREAT RECESSION!

It was exactly 3 years ago this day that BNP Paribas halted redemption from 3 of its hedge funds. Although housing prices have been falling even before, this was the one that trigger the effects on the financial system itself. And we all know what happened there chain reaction from Bear Sterns hedge funds failing to the company itself failing, then one by one small banks started to fail, big banks started to fail and the motherload Lehman Bros. failed and the rest is history as they say! We can still feel its effects, unemployment in the US is still very high!

[uls]

and after all the bailouts and govt stimulus and Fed ZIRP & QE, the US economy still can't get out of the hole it fell into

--

everyone's waiting for the Fed tomorrow

will the Fed change its language?

will the Fed announce another round of QE?

we'll see

[tidus1203]

By the way uls Greenspan says that those Bush tax cuts must now go. He actually supported it back then when he was Fed chief serving the Bush Jr. administration... Sudden reversal of opinion...

[uls]

kung kailan di na siya Fed chairman, doon lang siya nagbibigay ng honest opinion (like the video i posted where he said "the financial system is broke")

but his reputation is already tarnished

everyone thinks he's responsible for the housing bubble

now he's trying to repair his rep

people no longer take him as seriously as before

[uls]

all eyes on the Fed tonight

will it be the same old low-rates-extended-period language?

or will there be something more?

[tidus1203]

Yep I am quite itching to sell all my longs and start shorting the market again pending this meeting. Its a gamble I am willing to take. QEII has a very high probability and the market will not like that...

[uls]

scenarios:

1. The Fed does nothing. Which means the Fed thinks the recovery is on track.

2. The Fed announces QE2. Which means the Fed admits the recovery is faltering.

3. The Fed doesnt announce QE2 but says it would entertain the thought of QE2. Which means the Fed isnt sure if the recovery is on track or not and it wants to see things play out.

[tidus1203]

1st scenario very unlikely cause no serious economist would even say the recovery is on target...

Scenario 3 is the likely scenario... Scenario 2 will cause panic...

[tidus1203]

Scenario 3 nga nangyari... Fed recognizes there is a problem and is willing to aid the economy, albeit small. So they will do quantitative easing pero only $10B a month...

Market rallied soon after the news, but then faded towards the end...

[uls]

http://www.federalreserve.gov/newsev.../20100810a.htm

Release Date: August 10, 2010

For immediate release
Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Bank lending has continued to contract. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated.

Measures of underlying inflation have trended lower in recent quarters and, with substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The Committee will continue to roll over the Federal Reserve's holdings of Treasury securities as they mature.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.

the Fed will maintain the size of its balance sheet

the Fed will reinvest proceeds from investments in MBS (will buy longer maturity US treasuries)

[tidus1203]

Guess where I am at again?



Sold all my longs, and then longed this one yesterday prior to the Fed meeting!

[uls]

^^

hehe

good

[tidus1203]

Basta if I feel I want to short the market I just long QID, that's my de-facto trade for bearish trades. Ayaw ko na mag short ng individual stocks its harder to analyze. Just go long this reverse NASDAQ-100 makes life much easier...

[boybi]

Oil down to $78.70.

[uls]

tama yan

para sa matanda lang ang individual stocks hehe

everyone bets on ETFs na

[tidus1203]

Hehehe syempre oil is a risk asset kaya bagsak yan, conversely gold is rising because its a safe haven. The Yen is also the strongest major currency right now cause again its a safe haven (even safer than USD to some) and its a funding currency which needs to be unwound when huge drops like this happen... Dow down 200++ pts...

Oh I love making money short kaysa long. Why? Kasi fear is a stronger emotion than greed. So pag bumabagsak (FEAR) mas mabilis a few days lang you can make a lot of money while pag umaakyat (GREED) mas mabagal ang returns. Months sometimes...

[uls]

Oil down to $78.70.

risk aversion

the Fed acknowledged the US economic recovery is faltering

and the Fed didnt go full QE2

USD index

[uls]

euro falls

[tidus1203]

Wow laki nga ng bagsak ng EUR. Back down below 1.30 and below 1.29 even... Almost 300pips ang kumag!!!



EUR/JPY 5 day chart... The risk pair...

[uls]

the euro's run is over

and there are too many USD shorts

the pendulum has swung too far