World economy talk

[uls]

yes, baka lumakas pa nga daw to P40

i'm betting it won't

i'm taking the less popular side of the bet

[tidus1203]

Baka dumaplos lang tapos sabay akyat... Its hard to say given kasi momentum is carrying a lot of basura currencies worldwide while major currencies are racing to devaluate theirs...

[uls]

yes the EM currencies are strengthening coz of the Fed's money printing

not coz every emerging economy has become a huge exporter like China

[uls]

in QE lite, the Fed buys treasuries from its primary dealers (the too-big-to-fail banks)

and what do the TBTF banks do with the money?

http://www.gainspainscapital.com/

The ONLY Reason Stocks Have Rallied This Month

During Treasury auctions there are 18 banks, called Primary Dealers, who are given unprecedented access to US Debt (Treasuries) in terms of pricing and control. These are the BIG BOYS of finance including firms like Goldman Sachs, JP Morgan, Bank of America, Credit Suisse, and others.

During its QE 1 Program, the Fed bought over $1.0 trillion in securities from these firms. Its new QE lite program consists of it using the interest and proceeds from the securities in its portfolio that are maturing to buy Treasuries from the Primary Dealers via Permanent Open Market Operations (POMO).

In simple terms, the POMO actions allow the Fed to pump money into Wall Street (by buying Treasuries from the Primary Dealers) without DIRECTLY monetizing Treasury debt (the Treasuries had already been issued). The Primary Dealers then take this fresh capital from the Fed and plow into stocks, forcing the sort of ramp job we saw last week on Friday.

All told, the Fed has bought $20 billion worth of Treasuries in this fashion, $11.15 of which it purchased last week alone.

If you want to know why stocks have rallied in the last month, this is THE reason. The economy isn’t improving and the European Crisis isn’t over. Nothing has improved. All that has happened is the Fed funneled money into the Primary Dealers who ramped the market.

This is also the reason why the latest rally has almost entirely consisted of gap ups: the Primary Dealers ramp the market and then the computer trading programs take care of the rest.

[dcph172]

so i guess i should just hold on to usd's and buy more usd's when it hits the 40-41 levels.

[uls]

http://www.philstar.com/Article.aspx...bCategoryId=66

Peso seen to hit 40-to-$1 in a year

MANILA, Philippines - London-based investment bank Barclays Capital said it expects the Philippine peso to strengthen to 42.5 against the dollar within the next three months and further to 40 within the next 12 months on the back of the country’s strong macroeconomic fundamentals as well as the continued robust remittances from overseas Filipino workers (OFWs).

i'm betting Barclays will be wrong

hehe

[uls]

economic downturn, war spending, inflation, bull run on stocks, economic downturn, war spending, inflation, bull run on stocks...

US inflation now is too low

stocks are anemic

the Fed is trying to create inflation

the USG is trying to stimulate the economy



War on Terror is too small

the US needs a bigger war

to create inflation

to begin the next bull run on stocks

[safeorigin]

^^hence Iran

meanwhile in PIGS...

[ame="http://www.youtube.com/watch?v=fW-k72409GY"]YouTube - Europe Fury: People rise up against EU cash machine with anti-austerity marches[/ame]

oh btw...

somebody's advice is:
[ame="http://www.youtube.com/watch?v=TYHQLNb3zGA"]YouTube - Not enough bailouts: 'Suck it in and cope!'[/ame]

[tidus1203]

Yep kung meron mang gera its gotta be Iran most likely...

Yes wars always get the world out of recessions. World War II destroyed the Great Depression!

[uls]

i mentioned strong demand for physical gold

2010 Gold Buffalo Bullion Coins Sold Out
http://news.coinupdate.com/gold-buff...sold-out-0466/

In a memorandum sent to authorized purchasers, the US Mint indicated that their inventory of 2010 American Gold Buffalo Bullion Coins has been depleted. Furthermore, no additional inventory will be made available.

Supply Squeeze of Physical Gold and Silver May Be Heating Up
http://news.coinupdate.com/supply-sq...ating-up-0465/

My company does not deal with the customers who make purchases of tens to hundreds of millions of dollars at a time. Such buyers normally deal direct with the major brokers in London or New York. Instead, our median purchaser of gold and silver bullion-priced products probably spends less than $5,000 per transaction. We do have a number of customers who regularly spend five or six figures and the occasional seven figure deal, but my company’s total volume is unimportant when compared to total global precious metals trading.

Still, we are in constant communication with several primary distributors of products for the US Mint and other world mints that issue bullion products. We also keep in touch with a number of other wholesalers across the country. If there is a change in product availability or price level, we learn about it quickly.

Today my company enjoyed one of its five highest retail sales days of the past 30 years. As we were contacting wholesalers to replenish our inventories, we picked up what may be significant indicators that a supply squeeze of physical gold and silver could be heating up.

Three different wholesalers who are primary distributors for the US Mint told us that they have experienced a sharp increase in demand for physical silver coins and ingots in the past 48 hours.

When we tried to purchase a quantity of South Africa 1 Ounce Gold Krugerrands, we were also in for a shock. Yesterday, these coins were available pretty much everywhere, with wholesalers competing to sharpen their pencils to shave their ask price. Today, two of the wholesalers were completely out of Krugerrands for live delivery. Our cost to purchase these coins increased almost 0.5% more above the gold value than they did just the day before!

One more indicator of a potential supply squeeze is the “spot” price quoted by wholesalers. For protection in volatile markets, wholesalers often use two different spot prices, depending on whether they are buying or selling. For our last large silver order today, the distributor used an ask silver spot price that was eight cents higher than its bid spot price. Previously this company had used the same spot price for both buying and selling or had a maximum spread of just four cents for silver.

Our suddenly zooming retail demand and reports that this may be happening across the country, if it continues for a few more days, could spark another buying frenzy such as we experienced in late 2008. Two years ago, availability was so tight that it was not unusual for customers to have to wait at least a month after making payment to receive their merchandise. In 2008, premiums soared for just about any live physical gold and silver. At the peak, bags of US 90% Silver Coins were selling retail for about 40% above their intrinsic metal value!

[safeorigin]

Austrian Economists would argue however that it's the lack of intervention that restored the economy ^^

[Monseratto]

US dollar down, Oil is up...

[uls]

here's how much the dollar fell in 1 month



and how much gold has risen



NYMEX crude correlation to the dollar this time has been erratic

[Monseratto]

Something close to home...

[uls]

the EUR keeps rising despite all the bad news (Anglo Irish, PIGS)

weird diba?

here's why --

there's heavy EUR buying by Asian central banks

Asian central banks have been weakening their currencies by buying USD

then they diversify to EUR

that forces the EUR higher which then forces short-covering in the EUR

---

AUD/USD

[uls]

i think the dollar is oversold

the market has already priced in QE2

what the hell does it want to price in?

hyperinflation?

the problems in Europe are still there

the euro has to reflect the problems in the eurozone sooner or later

the euro has to come down

EUR/USD


--

and when eurozone problems take centerstage again (believe me, it will), there will be flight back to the USD

those funds chasing yield in emerging markets will cash in their chips and rush back to where they came from

[tidus1203]

Yes uls there could be a correction in the short term, pero strong support around the 1.3340 area for the EUR/USD...

[uls]

what stands in the way of the natural order of things are the Asian central banks

they have been trying to weaken their currencies by buying USD and recycling the USD into EUR, AUD (hence EUR, AUD strength)

[uls]

effect of Japan's intervention lasted about 2 weeks

USD/JPY

[tidus1203]

Yeah as expected by everyone... BOJ just don't get it do they? Its not in their hands anymore... The Yen's destiny is to go up especially now that the US is committed to devalue its currency to boost their economy through exports...