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Ralph Shell

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  • Central Banks Sell Dollars To Prevent Liquidity Crises [View article]
    Thanks for the great comments. I have never been a banker, and some of these transactions are confusing, however I think you have it right.

    The USD shortage in the euro zone has been building, a result of the timid ECB actions to quell the many debt issues. In an article we posted on 8-18 entitled "Scared Money Flows Favor the US," we noted:

    " by the billions has been flowing into the US Banking sector. Despite the S & P downgrade, the money flow into US Treasuries has pushed the price up and the rates down. It appears this is hot money, fleeing Europe, fearful the ever evolving debt crises will result in a credit freeze, possibly capital controls, and panic.....(and quoting an article by Desmond Lachman in the American)...

    In a recent survey, the Fitch rating agency found that, as of the end of May 2011, the U.S. money market industry had direct exposure of around $1.2 trillion, or around half of its overall assets, to the European banking system. And the Bank for International Settlement reports that U.S. banks have direct exposure to the periphery through derivative contracts of close to $500 billion, as well as loan exposure to German and French banks in excess of $1.2 trillion."

    This unified central bank liquidity injection should calm the market fears temporarily. But with Greece nearly insolvent, Italy needing to refinance billions and, with the new IMF head, the retiring ECB president and Chancellor Merkel hardly on the same page, how long will this continue?
    Sep 17 01:43 PM | 2 Likes Like |Link to Comment
  • Canadian Housing Starts Down 10% From Recent High [View article]
    Thank you for the interesting and insightful comments.

    To date the Canadian real estate markets have held their advance better than most other markets. Why is that?

    Is it possible that Canada is attracting some international hot money, looking for a place to invest and diversify? And if so, has this kept your markets firm? How much of your new immigration is from Asia?

    In Florida where I live we are inundated by immigrants, too poor to buy anything, often illegal, a burden to social support system and the schools .

    Will lower Canadian real estate values have a negative affect on the C$? At what point does the hot money take a pass, and wait for deflation to run it's course?

    Aug 10 09:17 PM | 2 Likes Like |Link to Comment
  • Will U.S. Economic Weakness Continue to Hurt Dollar? [View article]
    If you really want to get bearish on the US economic outlook, take a look at some of the details of 'Financial Reform' Act passed today. In addition to gender and racial quotas for all segments of the financial industry, the Washington intrusion extends well beyond Wall Street to many on Main Street.

    Meanwhile the friends of Barney Frank and Chris Dodd at Fannie and Freddie, a major epicenter of the last financial crises, remain unregulated, able to march on and mismanage the tax payers money.
    Jul 15 05:04 PM | 2 Likes Like |Link to Comment
  • Why The Loonie Fails To Fall [View article]
    The coming commodity boom may be in LNG, one of the reasons for the interest in Cheniere Energy. (LNG)
    Oct 9 01:04 PM | 1 Like Like |Link to Comment
  • Debt Markets Respond To NFP Report [View article]
    I too, have my doubts about the sustainability of the rally in US debt yields. The economy recovery propelled by the growth in part timers will be limited. This, combined with slow growth in China and no growth in Europe, makes me question the assumption, the global economy is on the recovery road.

    The Bernanke taper will remain a distant event.
    Jul 6 07:44 AM | 1 Like Like |Link to Comment
  • Greek Bailout Discussions Continue, Deadline Needed [View article]
    Maybe Trichet is merely paving the way for a cushy consulting job after his retirement. Kinda like Bob Rubin did, leaving the administration and going to Citi Bank as a consultant, as Citi went to the bail out window.
    Jun 16 09:59 AM | 1 Like Like |Link to Comment
  • Will USD Weakness and Firm Yen Continue? [View article]
    Agree there appears to be support in the low 22's but would not want to see the threat of a close under 22. I do not trust a triple bottom.

    I am watching closely the CME futures trade and open interest. The spec positions long something else and short the USD is quite large. If we add another 25/50,000 spec short USD positions, this will add some more get me out orders when the market turns.

    QEII may be in the market. The election results are not, and if the results are as the polls forecast, we will have gridlock, and quite probably the absence of further harmful legislation. Gridlock is not necessarily bad especially if it prevents harmful Federal government laws, forms, and regulations.
    Oct 25 05:22 PM | 1 Like Like |Link to Comment
  • On the Euro Rally and the State of the Swiss Franc [View article]
    My guess is that the SNB has been intervening because their banks have 'non performing loans' or the possibility of loans becoming non performing. A stronger Swissy makes it harder for the loans to be repaid, weather from Greece or East Europe. It has been my impression that Swiss banks had more exposure in East Europe, than further south.

    The SNB probably fears strength of their currency versus the euro more than the USD. Traditional respect and expectation by Europeans for a strong SF probably means the SNB is fighting a losing cause. Scared euro money continues to flow into Switzerland negating the central banks wishes for a weaker currency.

    Should the MACD crossover prove valid...only time will tell....the USD should gain on the SF perhaps to the 110/112 area.
    Apr 24 09:27 PM | 1 Like Like |Link to Comment
  • Loonie Mounting Another Attempt Toward Parity [View article]
    Thanks for your insightful comments. Today's economic reports, building permits, and the Ivey PMI, are not conducive to increasing rates very quickly.
    Mar 4 02:39 PM | 1 Like Like |Link to Comment
  • Time To Sell The Yen [View article]
    Anything is possible with enough liquidity. I fear, however, there may be strong economic head winds in the US, in case economic fundamentals is still a market driver.
    Feb 21 12:35 PM | Likes Like |Link to Comment
  • So The Yen Remains A Safe Haven: Really? [View article]
    This is a comment from the Telegraph and coming from the Economic Forum in Davos about the value of the yuan :

    "The moment the Chinese authorities open up the capital account and make the RMB convertible there will be a rush of money abroad. That will unleash captive funds in property that have nowhere else to go, and could trigger a disorderly fall in real estate prices, and much else besides. So the government will not do it yet."

    This implies a lower yuan but it looks like this will be deferred years and conditions might change by then.
    Jan 26 01:14 AM | Likes Like |Link to Comment
  • U.S. Debt Soars To New Record [View article]
    True, the Japanese debt is mostly owned by the Japanese, but will the Japanese bond holders want to continue holding Japanese bonds yielding only .65% for the ten year if Abe has success running the inflation rate up to 2%. Perhaps the first clue to a global distrust of bonds will be a flight of Japanese capital to higher yielding countries.

    The problem with dumping the USD as your reserve currency means you must have a better choice for those funds. There are not many alternatives to the USD that are unblemished, and can absorb a massive movement of capital.
    Oct 21 11:07 PM | Likes Like |Link to Comment
  • Is The U.S. Economy Really Growing Faster Than The Canadian Economy? [View article]
    I do not wish to imply that I condone the changes in the government's calculation in the GDP. Frankly I am concerned about the tax impact of these changes. If research and development can no longer be treated as a current expenses, but must now be capitalized, this will raise taxes. So is this change a tax increase?

    There may be more to these changes that initially reported. Could this be part of the administration's grand bargain to reduce US corporate taxes from the highest rate in the world?.

    Like it or not, it is best not to fight the government, like the Fed, in the market.
    Aug 1 11:29 AM | Likes Like |Link to Comment
  • Are We Close To Selling The USD? [View article]
    Looking at the COT report released Friday afternoon, there has been a substantial build in the spec long USD short almost everything. The biggest short is in the yen, and the second biggest, surprisingly, is in the pound.

    Regarding the yen, economic Minister Akira Amari when asked about the value of the yen on a talk show this weekend said he did not know but "it's being said that the correction of the strong yen is largely completed. If the yen keeps on weakening a lot more, it will have a negative impact on peoples' lives."

    Makes sense to me but we will see.
    May 19 02:00 PM | Likes Like |Link to Comment
  • Japan Yen Making Commences Next Week [View article]
    Sorry the Japanese debt is probably closer to $13T than the $23T.
    If you figure $40K per capita income time 128M population times 245% of the GDP you are then a shade less than $13T.

    The $23T number came from an Ambrose Evans-Pritchard column in the Telegraph written this week from Tokyo.

    Does he know some thing we do not?
    Mar 28 09:15 AM | Likes Like |Link to Comment