World economy talk

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Nov 2 US mid term elections

Nov 2-3 Fed meeting

in a few days, this whole week of QG (quantitative guessing) will finally be settled

how much will Fed QE2 be?

$500B? $1T?

this is gonna be fun

happy long weekend

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BTW

CFTC data shows long USD positions increasing

probably on expectations of amount of QE2 on the low side

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http://www.telegraph.co.uk/finance/f...for-kicks.html

hmmm...

potlatch...

The intertribal potlatches given by rival chiefs were elaborate shindigs
commonly lasting a week. Two sumptuous meals were served each day.
Between them, while the young men played games and held tugs of war,
the older people went from house to house -- gossiping, eating and
trading. At night they gambled. During that week, the chief might burn
hundreds of blankets and destroy several canoes to demonstrate his
wealth and superiority! On the last day, after a long speech, he
distributed lavish gifts. Within a reasonable time, the other tribe was
honor bound to hold a "return" potlatch and twice as many gifts.

in other news...

fed wants to print 4 trillion toilet paper

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USD/JPY


yen flash crash

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surprise RBA rate hike

[Monseratto]

Will a Republican controlled House actually make things worse?

Tea time: GOP nears House control, piling up wins

WASHINGTON – Republicans marched confidently to the brink of House control Tuesday night in midterm elections shadowed by recession, promising a conservative majority certain to challenge President Barack Obama at virtually every turn. The GOP gained Senate seats, as well, but a takeover there appeared out of reach.

With unemployment at 9.6 percent nationally, interviews with voters revealed an extraordinarily sour electorate, stressed financially and poorly disposed toward the president, the political parties and the federal government.

About four in 10 voters said they were worse off financially than two years ago, according to preliminary exit poll results and pre-election surveys. More than one in three said their votes were an expression of opposition to Obama. More than half expressed negative views about both political parties. Roughly 40 percent of voters considered themselves supporters of the conservative tea party movement. Less than half said they wanted the government to do more to solve problems.

The preliminary findings were based on Election Day and pre-election interviews with more than 9,000 voters.

A Republican takeover of the House would usher in a new era of divided government after two years in which Obama and fellow Democrats pushed through an economic stimulus bill, a landmark health care measure and legislation to rein in Wall Street after the near collapse of the economy in 2008.

Republicans opposed all three of the measures, accusing the president of supporting an ever-expanding role for the government with ever-rising spending.

http://news.yahoo.com/s/ap/us_electi...RpbWVnb3BuZQ--

[tidus1203]

Actually IMO gridlock is so much better, government almost always just makes things WORSE... If they are paralyzed less chance they can interfere and make stupid things...

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sugar

[Monseratto]

http://www.abs-cbnnews.com/business/...ired-exporters

Peso enters P42:$1 territory; warnings aired by exporters
BusinessWorld
Posted at 11/03/2010 3:51 AM | Updated as of 11/03/2010 2:18 PM
Tweet

MANILA, Philippines - The peso appreciated to P42-per-US dollar territory yesterday as the greenback continued to weaken amid a surge of inflows.

The local currency gained 25.5 centavos to close at P42.755 per dollar, up from Friday’s P43.010.

Tuesday's finish was the strongest since the peso closed at P42.70 on May 15, 2008.

Philippine stocks also rose to hit a new high. The Philippine Stock Exchange index closed at 4,341.74, with net foreign buying at a hefty P367.9 million.

Exporters claimed to have stopped taking orders, their competitiveness eroded by the peso’s strength, but the central bank was nonplussed.

"Many of our exporters have stopped accepting orders ... employers either downsized or closed," said Sergio R. Ortiz-Luis, Jr., Philippine Exporters Confederation president.

Oscar R. Sañez, Business Processing Association of the Philippines president, said: "We are looking at the government to intervene, to stem the appreciation of the peso, like other countries."

A strong peso makes exports of goods and services more expensive. Money sent home by overseas Filipino workers (OFWs) also translates into fewer pesos.

Victor B. Abola, an economist at the University of Asia and the Pacific, said: "This level of the peso is destructive."

"It not only affects OFWs, exporters, domestic manufacturers, employment, but also BPOs (business process outsourcing firms)," he added.

The central bank, however, said it would continue to abide by the peso’s free float. Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo pointed out, "the exchange rate reflects market fundamentals."

Marcelo E. Ayes, senior vice-president at Rizal Commercial Banking Corp., said the peso was buoyed by dollar inflows that stocked up over the long weekend.

"It is also the remittance season for our OFWs. [The dollar flows] will last until December," he added.

A currency trader said the dollar was weak due to the likelihood of another round of "quantitative easing" by the US Federal Reserve.

Quantitative easing (QE), or the purchase of government securities, will inject liquidity into the US financial system to stimulate the ailing economy. It's a little controversial, but the idea is to create money out of nothing and to get it in the hands of bankers, businessmen, and consumers to spur economic activity.

The problem is QE doesn't always work. Banks sometimes get nervous and hoard the cash. The Fed though is running out of options.

As this developed, credit rater Fitch Ratings said the Philippines was less vulnerable to risks from easing but added that the government should be watchful of the peso’s movement.

In a teleconference to discuss a report titled "Emerging Asia Vulnerability to Global Quantitative Easing(QE)," Andrew Colquhoun, head of Asia-Pacific Sovereign Ratings at Fitch, said the Philippines was insulated because of its exchange rate policy.

"The Philippines is more insulated from the risks of QE. It has more scope to absorb flows because of its exchange rate," he said.

The country follows a free-float system, which means the market determines the peso’s value. Other emerging Asian markets follow a managed float or a crawling peg to the dollar.

Mr. Colquhoun, however, said policy makers must continue to monitor capital flows and their impact.

"Policy makers cannot be indifferent to the exchange rate as too strong currency appreciation may be a threat," he said.

"The Philippines is looking at domestic growth. If the peso gyrates sharply, that could disrupt growth prospects."

Asked if the Philippines should impose capital controls, Mr. Colquhoun said this may not be necessary.

Mr. Guinigundo, for his part, said: "The BSP is closely monitoring FX flows and is ready to take action as appropriate and necessary

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^^^

hehe

countdown to QE2

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i think QE2 is another bank bailout disguised as an economic stimulant

Bernanke sees the recovery losing momentum and the housing market double dipping

He knows the TBTF banks will be in trouble again (collateral prices are falling)

since there's no political will for another TARP from the USG, everything now is in Bernanke's hands

remember, QE adds to bank reserves

the banks can either lend out the money or hoard it (as loan loss provision)

if the banks are expecting huges losses, they will hoard the money

[tidus1203]

RP is just a collateral of the continues selling of the USD...

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RP is just a collateral of the continues selling of the USD...

collateral damage (RP exporters, OFWs, BPO industry)

[tidus1203]

RP exporters = small, irrelevant... We import way more than export this is not Japan or Korea

OFW's = well, just work harder abroad. You still get pay higher over there net net then go back home...

BPO Industry = Obama is punishing you for outsourcing! Or is it Ben Bernanke punishing you? They want you to give the Americans their jobs back!

[safeorigin]

[ame="http://www.youtube.com/watch?v=_23Nt5XumaU"]YouTube - Is Obama A Keynesian? Rally For Sanity, 10/30/10[/ame]

lol kenyan...

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tidus:

RP exporters = small, irrelevant... We import way more than export this is not Japan or Korea

OFW's = well, just work harder abroad. You still get pay higher over there net net then go back home...

BPO Industry = Obama is punishing you for outsourcing! Or is it Ben Bernanke punishing you? They want you to give the Americans their jobs back!

you can also look at it as the US rebalancing world trade by force

trade balance between the US and its trading partners has been one sided for too long

the US buys more than it sells

the sellers don't want to buy much with the dollars they earn

they just hoard the dollars and invest them in US treasuries

exporters like Japan, China, Germany, SK, Taiwan, oil exporters have massive dollar reserves and treasury holdings

now the US wants the exporters to import more

but the exporters do not want to change the status quo

so the US is devaluing the USD to force the rebalancing

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[tidus1203]

FORD!!!!!! (NYSE:F)

I am now nearing my price targets, I should be selling very soon and take my nice handsome profit...

[uls]

QE2

the Fed will buy $600,000,000,000 of US treasuries

$75,000,000,000 per month for 8 months

http://www.federalreserve.gov/newsev.../20101103a.htm

Press Release

Release Date: November 3, 2010

For immediate release
Information received since the Federal Open Market Committee met in September confirms that the pace of recovery in output and employment continues to be slow. 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, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts continue to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have trended lower in recent quarters.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.

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 for the federal funds rate for an extended period.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Sandra Pianalto; Sarah Bloom Raskin; Eric S. Rosengren; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Voting against the policy was Thomas M. Hoenig. Mr. Hoenig believed the risks of additional securities purchases outweighed the benefits. Mr. Hoenig also was concerned that this continued high level of monetary accommodation increased the risks of future financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy.

Statement from Federal Reserve Bank of New York

2010 Monetary Policy Releases

Last update: November 3, 2010

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USD index

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NYMEX crude is breaking out