Seeking Alpha Dollar/Currencies stocks 'Dollar/Currencies' Tag RSS Syndication from SeekingAlpha.com SeekingAlpha.com http://seekingalpha.com/tag/dollar-currencies Resource Stocks: Volume Tells the Tale http://seekingalpha.com/article/172335-resource-stocks-volume-tells-the-tale?source=feed 172335 India’s central bank taking 200 tonnes (6.4 million oz) of gold from the IMF in an off-market trade has certainly lit a fire under the yellow metal. While a trade of that nature was anticipated, India, which is about the savviest of commercial gold players, was not atop the expected buyers’ list. Given the greenback was steady and that gold’s chart went near vertical when the overnight rumor became official, it is likely that the big long position that came into the market forced some covering on the short side. Is this more than a spike?
We think India’s move could be, in part, a signal it should have a bigger chair at economic tables, which we agree with. Since Indians are the biggest gold buyers on the planet, lifting a perceived overhang from its market has the side benefit for India's central bank of protecting an existing wealth pool of its citizens. And the near US $7 billion price tag is not large against India’s $260 billion foreign reserve holdings.
However, it does have a bigger impact on gold’s market (about $115 billion annually, now) and that got noticed. Also, it will further establish the notion of a currency basket that includes gold as a global trading medium, and conversely a weaker greenback. That should continue the move of capital into gold as dollar hedge.
In saying that, we realize that it would be tough for gold to replace the oil market as a home for dollar hedge trades simply because of the oil market's much larger scale. But oil cannot continue to gain without causing major problems for the near term economy, nor can oil continue to rise if other energy components are not doing the same. Scale aside; gold makes sense as a place to lay anti-dollar bets, and especially for players worried about longer term wealth preservation. But so too do other metals.
If copper does truly have a PhD in economics (not that that title has quite the allure of a few years ago), our take has to be that the Doctor is mulling over an extended lunch. The red metal’s price continues to bounce against the $3/lb ($6600/t) level even while available stockpiles have grown. There has been a slight decline of stockpiles in the past few days, but that was after having recouped 60% of the drawn down earlier in the year.
Clearly, new metrics are at work. We and others have already pointed at Dollar roulette as one. In fact that is a big part of the whole market these days, and it’s an issue that will grow in the telling. There has also been a build up of small supply disruptions in copper, such as the shut down of most output from BHP’s Olympic Dam mine in South Australia. The mine’s capacity is less than 1% of global copper supply (but a big chunk of uranium output), but this isn’t the only mine at reduced capacity.
The psychology of relatively minor supply disruptions when new mine development is still limited may be adding some price support. The other base metals are similarly in a neural pose these days. Rumblings about a better market are most prominent around zinc, as are concerns about maintaining concentrate streams to smelters outside of China. That would be next year’s story, but it is worth noting. For the past century or so mines were dictated to by smelters, but now smelters are worried about keeping their market shares and the balance of power has been shifting.
As with most things in this changing market landscape, it is tough to make assumptions about the next six months. That simple truism is driving things right now, if being in neutral could be called “driving.” Producers’ share prices are shifting with the market, but still finding support. It may well be the balance of the year will mostly be about ensuring gains after a strong uptick, and making cash for future events.
There has been more weakness due to profits taking in some of the early exploration gainers. Conversely, former laggards have been able to pick up steam by showing project advancement. There is a general sense of rotation out of strength and into future potential, at least in our part of the playground. That is meaningful.
As broader stock market gains began to peel away, we have been struck by a consistent lift in one measure. While other North American equity markets saw share turn over slide the TSX Venture exchange has actually seen daily volumes as strong as they have ever been. This is not dollar-volume, and some of it can be accounted for by share issuances that are bloated by historic standards. It does however indicate that there are still punters out there.
While we think of the Venture exchange as a proxy of the junior resource sector, other sectors are obviously part of it. Funding for the Tech space is reviving a decade after that bubble burst, and green energy concepts are growing in number. However, on checking volume leaders most days the lists are at least nominally composed primarily of resource deals.
Bears might argue this is desperate averaging down ahead of the next major down shift in the market. It doesn’t look to us like the random buying during the bounce of a bear market rally. That type of buying typically comes in spurts, and focused on companies based on their previous market strength. Nor frankly do we think such buying is very likely after last year’s market drubbing.
This is a sustained turnover that relates to broader markets only in terms of showing patience on weak days. It is focused on companies that do have underlying assets, regardless of how well they made markets in the past. We see a concerted effort to own resource assets in juniors while they are still in the bargain bin. And we believe this is being done by folks who have been around the sector long enough to recognize that US dollar roll over and supply constraints are still near and mid term factors.
To anyone who thinks we are drinking our own bathwater we can only say, 'you’re right.' We are not suggesting that simply because “the usual suspects” are coming to the venture side of mining that prices will go up. Nor does this buying mean they all expect immediate gratification. However, there is a mood building for significant gains for the sector this coming year. Even market watchers with large concerns about the broader economy are recognizing that the resource sector has good fundamental potential. Both supply-demand against Asian growth and the shifting currencies market favour it.
We do expect the balance of the year to have a significant cash generating ethic. After the roller coaster ride we have had that kind of prudence is to be expected. Despite base metal prices holding up, that kind of thinking is evident by consolidation amongst the producers in that space. Gold producers have been doing better, and for the time being we continue to expect this to be the preferred subsector in the metals market.
There may be some frustration with explorers who seem not to be living up to their results, relative to peers, after putting in strong performances. Taking gains along the way will continue to be important, but we also expect rebalancing that will include stronger recognition for undervalued assets. That is usually a question of moving through volume, and the market shifts that take place through year end.
Barring an “event” of some magnitude, it will take an accumulation of stats indicating how well economies are doing as their government stimuli slow down to shift the market too far off its current groove. That is will be next year’s story, and we think it’s too soon to make assumptions on the outcome.
For the time being we will remain on volume watch, both in terms of metals directly and the equities that deal with them. We continue to favor speculations that can generate drilling success, while accumulating those that are still waiting for a mood shift in the market that will lead traders to recognize their already established values.
Disclosure: No positions
]]> Mon, 09 Nov 2009 18:18:50 -0500 Eric Coffin Eric Coffin submits:
India’s central bank taking 200 tonnes (6.4 million oz) of gold from the IMF in an off-market trade has certainly lit a fire under the yellow metal. While a trade of that nature was anticipated, India, which is about the savviest of commercial gold players, was not atop the expected buyers’ list. Given the greenback was steady and that gold’s chart went near vertical when the overnight rumor became official, it is likely that the big long position that came into the market forced some covering on the short side. Is this more than a spike?
We think India’s move could be, in part, a signal it should have a bigger chair at economic tables, which we agree with. Since Indians are the biggest gold buyers on the planet, lifting a perceived overhang from its market has the side benefit for India's central bank of protecting an existing wealth pool of its citizens. And the near US $7 billion price tag is not large against India’s $260 billion foreign reserve holdings.
However, it does have a bigger impact on gold’s market (about $115 billion annually, now) and that got noticed. Also, it will further establish the notion of a currency basket that includes gold as a global trading medium, and conversely a weaker greenback. That should continue the move of capital into gold as dollar hedge.
In saying that, we realize that it would be tough for gold to replace the oil market as a home for dollar hedge trades simply because of the oil market's much larger scale. But oil cannot continue to gain without causing major problems for the near term economy, nor can oil continue to rise if other energy components are not doing the same. Scale aside; gold makes sense as a place to lay anti-dollar bets, and especially for players worried about longer term wealth preservation. But so too do other metals.
If copper does truly have a PhD in economics (not that that title has quite the allure of a few years ago), our take has to be that the Doctor is mulling over an extended lunch. The red metal’s price continues to bounce against the $3/lb ($6600/t) level even while available stockpiles have grown. There has been a slight decline of stockpiles in the past few days, but that was after having recouped 60% of the drawn down earlier in the year.
Clearly, new metrics are at work. We and others have already pointed at Dollar roulette as one. In fact that is a big part of the whole market these days, and it’s an issue that will grow in the telling. There has also been a build up of small supply disruptions in copper, such as the shut down of most output from BHP’s Olympic Dam mine in South Australia. The mine’s capacity is less than 1% of global copper supply (but a big chunk of uranium output), but this isn’t the only mine at reduced capacity.
The psychology of relatively minor supply disruptions when new mine development is still limited may be adding some price support. The other base metals are similarly in a neural pose these days. Rumblings about a better market are most prominent around zinc, as are concerns about maintaining concentrate streams to smelters outside of China. That would be next year’s story, but it is worth noting. For the past century or so mines were dictated to by smelters, but now smelters are worried about keeping their market shares and the balance of power has been shifting.
As with most things in this changing market landscape, it is tough to make assumptions about the next six months. That simple truism is driving things right now, if being in neutral could be called “driving.” Producers’ share prices are shifting with the market, but still finding support. It may well be the balance of the year will mostly be about ensuring gains after a strong uptick, and making cash for future events.
There has been more weakness due to profits taking in some of the early exploration gainers. Conversely, former laggards have been able to pick up steam by showing project advancement. There is a general sense of rotation out of strength and into future potential, at least in our part of the playground. That is meaningful.
As broader stock market gains began to peel away, we have been struck by a consistent lift in one measure. While other North American equity markets saw share turn over slide the TSX Venture exchange has actually seen daily volumes as strong as they have ever been. This is not dollar-volume, and some of it can be accounted for by share issuances that are bloated by historic standards. It does however indicate that there are still punters out there.
While we think of the Venture exchange as a proxy of the junior resource sector, other sectors are obviously part of it. Funding for the Tech space is reviving a decade after that bubble burst, and green energy concepts are growing in number. However, on checking volume leaders most days the lists are at least nominally composed primarily of resource deals.
Bears might argue this is desperate averaging down ahead of the next major down shift in the market. It doesn’t look to us like the random buying during the bounce of a bear market rally. That type of buying typically comes in spurts, and focused on companies based on their previous market strength. Nor frankly do we think such buying is very likely after last year’s market drubbing.
This is a sustained turnover that relates to broader markets only in terms of showing patience on weak days. It is focused on companies that do have underlying assets, regardless of how well they made markets in the past. We see a concerted effort to own resource assets in juniors while they are still in the bargain bin. And we believe this is being done by folks who have been around the sector long enough to recognize that US dollar roll over and supply constraints are still near and mid term factors.
To anyone who thinks we are drinking our own bathwater we can only say, 'you’re right.' We are not suggesting that simply because “the usual suspects” are coming to the venture side of mining that prices will go up. Nor does this buying mean they all expect immediate gratification. However, there is a mood building for significant gains for the sector this coming year. Even market watchers with large concerns about the broader economy are recognizing that the resource sector has good fundamental potential. Both supply-demand against Asian growth and the shifting currencies market favour it.
We do expect the balance of the year to have a significant cash generating ethic. After the roller coaster ride we have had that kind of prudence is to be expected. Despite base metal prices holding up, that kind of thinking is evident by consolidation amongst the producers in that space. Gold producers have been doing better, and for the time being we continue to expect this to be the preferred subsector in the metals market.
There may be some frustration with explorers who seem not to be living up to their results, relative to peers, after putting in strong performances. Taking gains along the way will continue to be important, but we also expect rebalancing that will include stronger recognition for undervalued assets. That is usually a question of moving through volume, and the market shifts that take place through year end.
Barring an “event” of some magnitude, it will take an accumulation of stats indicating how well economies are doing as their government stimuli slow down to shift the market too far off its current groove. That is will be next year’s story, and we think it’s too soon to make assumptions on the outcome.
For the time being we will remain on volume watch, both in terms of metals directly and the equities that deal with them. We continue to favor speculations that can generate drilling success, while accumulating those that are still waiting for a mood shift in the market that will lead traders to recognize their already established values.
Disclosure: No positions

Complete Story »]]> GLD UDC UUP Eric Coffin The Dollar as a Funding Currency http://seekingalpha.com/article/172274-the-dollar-as-a-funding-currency?source=feed 172274 Nouriel Roubini is not a man who is known for mincing his words. “We have the mother of all carry trades,” he tells us, “Everybody’s playing the same game and this game is becoming dangerous.” There is a “wall of liquidity” sweeping the planet, pushing asset prices ever higher in one country after another. I wholeheartedly agree.

Investors across the globe are taking advantage of the ultra low interest rates on offer at the US Federal Reserve to borrow in dollars in order to buy assets like government debt, equities and commodities, in the process, as Nouriel says, fueling “substantial” booms that if not checked in time may sow the seeds of yet another financial crisis. This is a classic example of the so called “carry trade” in which investors borrow in countries with low interest rates to invest in higher-yielding assets.

]]> Mon, 09 Nov 2009 14:36:27 -0500 Edward Hugh Edward Hugh submits:

Nouriel Roubini is not a man who is known for mincing his words. “We have the mother of all carry trades,” he tells us, “Everybody’s playing the same game and this game is becoming dangerous.” There is a “wall of liquidity” sweeping the planet, pushing asset prices ever higher in one country after another. I wholeheartedly agree.

Investors across the globe are taking advantage of the ultra low interest rates on offer at the US Federal Reserve to borrow in dollars in order to buy assets like government debt, equities and commodities, in the process, as Nouriel says, fueling “substantial” booms that if not checked in time may sow the seeds of yet another financial crisis. This is a classic example of the so called “carry trade” in which investors borrow in countries with low interest rates to invest in higher-yielding assets.


Complete Story »]]> DBV FXE FXY UDN UUP Edward Hugh Inflation Expectations: Exaggerated or On Track? http://seekingalpha.com/article/172265-inflation-expectations-exaggerated-or-on-track?source=feed 172265 There was much talk Monday about what appears to be rising inflation expectations in the U.S., with several market indicators capturing people's attention.
First, the yield curve, measured by the difference between the 2-year yield and the 10-year yields, stands near 262 basis points, having risen now 21 bp over the past month. Second, the five-year/five-year forward, which some Fed officials have cited in the past, is at 288 bp Monday, its highest level in over a year. This is also reflected in the 10-year breakevens (10-year TIPS vs the conventional note yield). Third, some observers are also emphasizing the new record high price of gold. Fourth, the dollar remains offered with the much watched dollar index making a new low for the year.
Just last week, the FOMC statement identified that "subdued inflation trends, and stable inflation expectations". Could it be wrong so soon?
Perhaps there is something else going on. Like what? Like a record quarterly refunding this week. Each leg, $40 billion of the 3-year note, $25 billion of the 10-year note and $16 billion of the 30-year bond, is a record.
In addition, over the weekend, Obama signed on to a further extension of unemployment benefits, an extension of the home buyers' tax break and an extension of businesses ability to deduct 2008 (and now 2009) losses from profits over the past five years (not just two).
The US does not report its October inflation readings until next week, and both the PPI and CPI are expected to remain in negative territory. In September, PPI stood 4.8% below year-ago levels, while the consensus is for the October reading to be around -2%. But this likely reflects energy prices and core PPI is likely to ease toward 1.4-1.5% from 1.8% in September. Headline consumer prices are expected to have risen by 0.3%, but this too is likely a reflection of food and energy prices. Core prices are expected to have risen by 0.1%. The year-over-year headline rate may moderate to -0.2% from -1.3% owing largely to base effects, while core CPI is expected to be little changed at 1.5%.
It seems too early to conclude that inflation expectations have broken out to the upside. It would be significant development if they did and, therefore, it requires convincing evidence to draw that conclusion. A clearer picture should emerge on the other side of this week's refunding and next week's inflation report.
That said, over time inflation expectations likely will rise as the US economy continues what we expect to be a moderate recovery with the next several quarters averaging above trend growth. The high levels of unemployment, which still appears to be rising even though the pace of initial jobless claim filing and non-farm payroll cuts seem to be moderating, relatively low level of industrial capacity utilization and low unit labor costs, suggest some observers may be exaggerating the near-term inflation outlook.
Disclosure: No positions
]]> Mon, 09 Nov 2009 13:41:11 -0500 Marc Chandler Marc Chandler submits:
There was much talk Monday about what appears to be rising inflation expectations in the U.S., with several market indicators capturing people's attention.
First, the yield curve, measured by the difference between the 2-year yield and the 10-year yields, stands near 262 basis points, having risen now 21 bp over the past month. Second, the five-year/five-year forward, which some Fed officials have cited in the past, is at 288 bp Monday, its highest level in over a year. This is also reflected in the 10-year breakevens (10-year TIPS vs the conventional note yield). Third, some observers are also emphasizing the new record high price of gold. Fourth, the dollar remains offered with the much watched dollar index making a new low for the year.
Just last week, the FOMC statement identified that "subdued inflation trends, and stable inflation expectations". Could it be wrong so soon?
Perhaps there is something else going on. Like what? Like a record quarterly refunding this week. Each leg, $40 billion of the 3-year note, $25 billion of the 10-year note and $16 billion of the 30-year bond, is a record.
In addition, over the weekend, Obama signed on to a further extension of unemployment benefits, an extension of the home buyers' tax break and an extension of businesses ability to deduct 2008 (and now 2009) losses from profits over the past five years (not just two).
The US does not report its October inflation readings until next week, and both the PPI and CPI are expected to remain in negative territory. In September, PPI stood 4.8% below year-ago levels, while the consensus is for the October reading to be around -2%. But this likely reflects energy prices and core PPI is likely to ease toward 1.4-1.5% from 1.8% in September. Headline consumer prices are expected to have risen by 0.3%, but this too is likely a reflection of food and energy prices. Core prices are expected to have risen by 0.1%. The year-over-year headline rate may moderate to -0.2% from -1.3% owing largely to base effects, while core CPI is expected to be little changed at 1.5%.
It seems too early to conclude that inflation expectations have broken out to the upside. It would be significant development if they did and, therefore, it requires convincing evidence to draw that conclusion. A clearer picture should emerge on the other side of this week's refunding and next week's inflation report.
That said, over time inflation expectations likely will rise as the US economy continues what we expect to be a moderate recovery with the next several quarters averaging above trend growth. The high levels of unemployment, which still appears to be rising even though the pace of initial jobless claim filing and non-farm payroll cuts seem to be moderating, relatively low level of industrial capacity utilization and low unit labor costs, suggest some observers may be exaggerating the near-term inflation outlook.
Disclosure: No positions

Complete Story »]]> UDN UUP Marc Chandler Czech Reports This Week Could Spur Euro Rally http://seekingalpha.com/article/172264-czech-reports-this-week-could-spur-euro-rally?source=feed 172264 The euro has slumped around 4% against the Czech koruna since November 2nd, and the news stream from Czech Republic has not been that supportive, giving the impression that koruna is being lifted by generalized factors.
This has been a particularly difficult year for Czech politics. Recall that the country's government collapsed while holding the rotating EU presidency, and jockeying for advantage had it challenging the Lisbon Treaty. Now, Prime Minister Fischer has nominated the central bank governor Tuma as the country's next EU commissioner, and domestic political considerations seem to be behind the nomination. Fischer was previously under pressure to take the post himself but now may see this as an opportunity to deal with a political adversary and give him the ability to name a new central bank governor. On the other hand, some opposition parties insist that Fischer takes the commissioner post and that would necessitate a caretaker government until elections can held next May-June period.
The country will report a series of economic data in the coming days, kicking off Monday with October unemployment (8.5% vs 8.6% September) and October CPI (-0.2% month-over-month and year-over-year vs -0.4% and 0 respectively in September). September data (industrial production, construction output and retail sales) are due out in the next few days, but the highlight will be the preliminary Q3 GDP report on Friday. The early consensus expects a 4.7% contraction (seasonally adjusted year-over-year) compared with the 5.5% contraction in Q2 and 4.5% contraction in Q1. It will be the third consecutive quarterly contraction.
The euro has fallen through the pre-weekend lows seen near CZK25.63 near the retracement objective of the euro's rally since mid-September. The next level of support is seen in the CZK25.50 area. The hourly momentum indicators are showing bullish euro divergence, suggesting a low may be in place. The first test on the upside comes in back at Friday's low and then CZK25.70. Look for a near-term bounce in the euro. The structure of the bounce will indicate whether it is simply a correction or the beginning of a new rally in the euro.
Disclosure: No positions
]]> Mon, 09 Nov 2009 13:34:14 -0500 Marc Chandler Marc Chandler submits:
The euro has slumped around 4% against the Czech koruna since November 2nd, and the news stream from Czech Republic has not been that supportive, giving the impression that koruna is being lifted by generalized factors.
This has been a particularly difficult year for Czech politics. Recall that the country's government collapsed while holding the rotating EU presidency, and jockeying for advantage had it challenging the Lisbon Treaty. Now, Prime Minister Fischer has nominated the central bank governor Tuma as the country's next EU commissioner, and domestic political considerations seem to be behind the nomination. Fischer was previously under pressure to take the post himself but now may see this as an opportunity to deal with a political adversary and give him the ability to name a new central bank governor. On the other hand, some opposition parties insist that Fischer takes the commissioner post and that would necessitate a caretaker government until elections can held next May-June period.
The country will report a series of economic data in the coming days, kicking off Monday with October unemployment (8.5% vs 8.6% September) and October CPI (-0.2% month-over-month and year-over-year vs -0.4% and 0 respectively in September). September data (industrial production, construction output and retail sales) are due out in the next few days, but the highlight will be the preliminary Q3 GDP report on Friday. The early consensus expects a 4.7% contraction (seasonally adjusted year-over-year) compared with the 5.5% contraction in Q2 and 4.5% contraction in Q1. It will be the third consecutive quarterly contraction.
The euro has fallen through the pre-weekend lows seen near CZK25.63 near the retracement objective of the euro's rally since mid-September. The next level of support is seen in the CZK25.50 area. The hourly momentum indicators are showing bullish euro divergence, suggesting a low may be in place. The first test on the upside comes in back at Friday's low and then CZK25.70. Look for a near-term bounce in the euro. The structure of the bounce will indicate whether it is simply a correction or the beginning of a new rally in the euro.
Disclosure: No positions

Complete Story »]]> ERO Marc Chandler Stock Market Returns Lost in Translation http://seekingalpha.com/article/172254-stock-market-returns-lost-in-translation?source=feed 172254 One of the side effects of a weaker dollar is that the returns for foreign investors who invest in US assets are diminished. While the value of the asset may rise in dollar terms, if the dollar is losing value, the investor takes a hit when they convert their funds back into their domestic currency. For example, while the S&P 500 has risen 20.2% so far this year in US dollars, investors outside of the US have generally seen much less impressive returns.

In the table below, we looked at the YTD returns of the S&P 500 for investors in various currencies. Of the currencies we looked at, the only one that has seen a benefit from the currency translation is the Argentinean Peso. Returns have been diminished once fluctuations are taken into account for all other currencies. And of course some countries have been affected more than others. So far this year, Brazilian investors who bought the S&P 500 at the end of last year have lost nearly 12 reals for every 100 they invested on January 1st.

]]> Mon, 09 Nov 2009 13:05:10 -0500 Bespoke Investment Group Hickey and Walters (Bespoke) submit:

One of the side effects of a weaker dollar is that the returns for foreign investors who invest in US assets are diminished. While the value of the asset may rise in dollar terms, if the dollar is losing value, the investor takes a hit when they convert their funds back into their domestic currency. For example, while the S&P 500 has risen 20.2% so far this year in US dollars, investors outside of the US have generally seen much less impressive returns.

In the table below, we looked at the YTD returns of the S&P 500 for investors in various currencies. Of the currencies we looked at, the only one that has seen a benefit from the currency translation is the Argentinean Peso. Returns have been diminished once fluctuations are taken into account for all other currencies. And of course some countries have been affected more than others. So far this year, Brazilian investors who bought the S&P 500 at the end of last year have lost nearly 12 reals for every 100 they invested on January 1st.


Complete Story »]]> BZF FXA FXB FXC FXE FXY ICN INR IVV SPY SZR UDN UUP XRU Bespoke Investment Group Does Disaster Loom from Dollar Funded Carry Trades? http://seekingalpha.com/article/172241-does-disaster-loom-from-dollar-funded-carry-trades?source=feed 172241

You can put a fork in us down the road....

The U.S. currency dropped against 12 of its 16 major counterparts as the International Monetary Fund said traders are probably using the dollar to fund so-called carry trades around the world and it may still be overvalued.

]]> Mon, 09 Nov 2009 12:10:49 -0500 Karl Denninger Karl Denninger submits:

You can put a fork in us down the road....

The U.S. currency dropped against 12 of its 16 major counterparts as the International Monetary Fund said traders are probably using the dollar to fund so-called carry trades around the world and it may still be overvalued.


Complete Story »]]> UDN UUP Karl Denninger Divining the Next Crisis: All Eyes on the Dollar http://seekingalpha.com/article/172234-divining-the-next-crisis-all-eyes-on-the-dollar?source=feed 172234 As I wrote earlier this year, the US’s monetary policy has already laid the seeds of the next Crisis. It is now no longer a question whether or not another Crisis is coming; instead, it’s a question of which Crisis and when. I’ve detailed what I think are the three general options below:

]]> Mon, 09 Nov 2009 11:42:56 -0500 Graham Summers As I wrote earlier this year, the US’s monetary policy has already laid the seeds of the next Crisis. It is now no longer a question whether or not another Crisis is coming; instead, it’s a question of which Crisis and when. I’ve detailed what I think are the three general options below:


Complete Story »]]> DIA QQQQ SPY UDN UUP Graham Summers Monday FX View: Bon Appetit http://seekingalpha.com/article/172222-monday-fx-view-bon-appetit?source=feed 172222 Today investors are gorging on anything other than the U.S. dollar as a new feast of fourth quarter risk appetite gets underway. It took perhaps an hour to get over Friday’s sticker-shock in the shape of a 10.2% headline reading of unemployment before the dollar would lie back down. Over the weekend it took admission from the G20 that the world economy is “not out of the woods yet,” and a weekend report from the IMF noting that the dollar has moved “closer to medium term equilibrium” but remains “on the strong side,” to rally another episode of risk appetite. The dollar so far has fallen to a two-week low in terms of the broad-based dollar index and the euro has once again regained $1.50. It seems that it’s becoming easier to convince investors that trading in their worn out dollars might be rewarded with incremental gains in riskier overseas assets.

]]> Mon, 09 Nov 2009 10:27:04 -0500 Andrew Wilkinson Today investors are gorging on anything other than the U.S. dollar as a new feast of fourth quarter risk appetite gets underway. It took perhaps an hour to get over Friday’s sticker-shock in the shape of a 10.2% headline reading of unemployment before the dollar would lie back down. Over the weekend it took admission from the G20 that the world economy is “not out of the woods yet,” and a weekend report from the IMF noting that the dollar has moved “closer to medium term equilibrium” but remains “on the strong side,” to rally another episode of risk appetite. The dollar so far has fallen to a two-week low in terms of the broad-based dollar index and the euro has once again regained $1.50. It seems that it’s becoming easier to convince investors that trading in their worn out dollars might be rewarded with incremental gains in riskier overseas assets.


Complete Story »]]> ADE CUD ERE FXA FXB FXC FXE FXF FXY JYN SZE UDN UUP Andrew Wilkinson New Zealand Kiwi Is Outperforming the Dollar http://seekingalpha.com/article/172211-new-zealand-kiwi-is-outperforming-the-dollar?source=feed 172211
Commodity-linked currencies, led by the New Zealand Dollar, moved sharply higher versus the U.S. Dollar in Monday’s trading in Sydney. As reported at 10:35 a.m. in Sydney, the U.S. Dollar Index, a measure of the greenback’s value versus a group of major currencies, traded at 75.646 .DXY, a decline of .23%.

The New Zealand Dollar rose 1.7% to $0.7370, the highest trade in nearly 2 weeks, following the news that New Zealand dairy producer, Fonterra Cooperative Group, Ltd., increased their payout to shareholders by nearly 20%, mirroring the rise in global dairy prices. Dairy accounts for the largest percentage of exports from New Zealand farmers, and the Fonterra Group is the largest dairy exporter in the world. The Australian Dollar also moved higher versus the U.S. Dollar, rising above $0.9200.

]]> Mon, 09 Nov 2009 09:41:01 -0500 Daily Forex
Commodity-linked currencies, led by the New Zealand Dollar, moved sharply higher versus the U.S. Dollar in Monday’s trading in Sydney. As reported at 10:35 a.m. in Sydney, the U.S. Dollar Index, a measure of the greenback’s value versus a group of major currencies, traded at 75.646 .DXY, a decline of .23%.

The New Zealand Dollar rose 1.7% to $0.7370, the highest trade in nearly 2 weeks, following the news that New Zealand dairy producer, Fonterra Cooperative Group, Ltd., increased their payout to shareholders by nearly 20%, mirroring the rise in global dairy prices. Dairy accounts for the largest percentage of exports from New Zealand farmers, and the Fonterra Group is the largest dairy exporter in the world. The Australian Dollar also moved higher versus the U.S. Dollar, rising above $0.9200.


Complete Story »]]> Daily Forex Options Trader Monday Outlook: 50 Ways to Dump the Dollar http://seekingalpha.com/article/172210-options-trader-monday-outlook-50-ways-to-dump-the-dollar?source=feed 172210

"The problem is all inside your head", G20 said to me
The economy’s an easy fix if you don’t want to wait
All we need to do is globally inflate
There must be fifty ways to dump the dollar

G20 said it’s really not our habit to deflate
Furthermore, we have elections and the voters hate to wait
So we’ll indebt ourselves, by lowering the rates
There must be fifty ways to dump the dollar
Fifty ways to dump the dollar

]]> Mon, 09 Nov 2009 09:40:36 -0500 Philip Davis Phil Davis submits:

"The problem is all inside your head", G20 said to me
The economy’s an easy fix if you don’t want to wait
All we need to do is globally inflate
There must be fifty ways to dump the dollar

G20 said it’s really not our habit to deflate
Furthermore, we have elections and the voters hate to wait
So we’ll indebt ourselves, by lowering the rates
There must be fifty ways to dump the dollar
Fifty ways to dump the dollar


Complete Story »]]> DIA IYT QQQQ SPY Philip Davis The Consequences of the U.S. Monetary Base Bubble http://seekingalpha.com/article/172206-the-consequences-of-the-u-s-monetary-base-bubble?source=feed 172206 This is a more serious and depressing article than normal.
With all the talk about money printing and buying back of treasuries, we felt it was time to see how the US Monetary Base is getting on. [For those too lazy to click on the the link, a country's monetary base can loosely be defined and measured as the sum of currency in circulation - depending upon who calcuated the figures it may or may not include 'commodity' moneys (gold, silver, etc) - if you need more, look it up].
We knew that it had got a little exuberant late last year but we have neglected to look at it seriously for a few months.
US Monetary Base 1998 - Present
click to enlarge
Those two little insignificant blips on the left of the graph were the Y2K thingy and 9/11. Which nobody, at the time, felt were insignificant!
Let's get a little more historical perspective.
US Monetary Base 1970 - Present
I think the technical term is: "Dude, a metric bucket load of additional capital has suddenly appeared in our circulation."
We can see no end, or even the beginning of the end, in sight.
If you want to know where the bubble is in world markets, it is to be found in the chart above. Everything else we are seeing in the world right now is merely a symptom of the Fed and/or US Treasury having gone completely mad, or perhaps desperate.
Clearly there is a serious problem. To be honest we are having a lot of trouble comprehending the likely consequences. Can any readers state a reasonable case as to why we are not going to see inflation at levels that will make the 1970s look like child’s play? By this we mean before year-end 2010, crude will be above $200, gold above $2,000 and yields on US 30 Year Treasuries above 8%.
Yield on the US 30yr Treasury 1980 - Present
We get this sinking feeling that yields on the US 30yr are going to also blow up like we have not witnessed in modern history. Goodness knows what other economic effects that will have as well. Again, any reader with a sensible view please add your comment for or against.
After this exercise I can look in the mirror and while things may still look the same, the way I see things has definitely changed.
Disclosure: Long OTM call options on DBC and OTM puts on TLT.
]]> Mon, 09 Nov 2009 09:06:38 -0500 Thomas MacLeod Thomas MacLeod submits:
This is a more serious and depressing article than normal.
With all the talk about money printing and buying back of treasuries, we felt it was time to see how the US Monetary Base is getting on. [For those too lazy to click on the the link, a country's monetary base can loosely be defined and measured as the sum of currency in circulation - depending upon who calcuated the figures it may or may not include 'commodity' moneys (gold, silver, etc) - if you need more, look it up].
We knew that it had got a little exuberant late last year but we have neglected to look at it seriously for a few months.
US Monetary Base 1998 - Present
click to enlarge
Those two little insignificant blips on the left of the graph were the Y2K thingy and 9/11. Which nobody, at the time, felt were insignificant!
Let's get a little more historical perspective.
US Monetary Base 1970 - Present
I think the technical term is: "Dude, a metric bucket load of additional capital has suddenly appeared in our circulation."
We can see no end, or even the beginning of the end, in sight.
If you want to know where the bubble is in world markets, it is to be found in the chart above. Everything else we are seeing in the world right now is merely a symptom of the Fed and/or US Treasury having gone completely mad, or perhaps desperate.
Clearly there is a serious problem. To be honest we are having a lot of trouble comprehending the likely consequences. Can any readers state a reasonable case as to why we are not going to see inflation at levels that will make the 1970s look like child’s play? By this we mean before year-end 2010, crude will be above $200, gold above $2,000 and yields on US 30 Year Treasuries above 8%.
Yield on the US 30yr Treasury 1980 - Present
We get this sinking feeling that yields on the US 30yr are going to also blow up like we have not witnessed in modern history. Goodness knows what other economic effects that will have as well. Again, any reader with a sensible view please add your comment for or against.
After this exercise I can look in the mirror and while things may still look the same, the way I see things has definitely changed.
Disclosure: Long OTM call options on DBC and OTM puts on TLT.

Complete Story »]]> DBC IEF TIP TLT Thomas MacLeod Global Liquidity Drip-Feed: Still in Place http://seekingalpha.com/article/172205-global-liquidity-drip-feed-still-in-place?source=feed 172205 There were references to quantative easing at the G-20 meeting in Scotland this weekend, and the speed that the developed economies can be taken off the drip-feed of central bank liquidity.

"It is too early to start to lean against recovery," said U.S. Treasury Secretary Tim Geithner in his speech. "The classic mistake in past crises was to put on the brakes too quickly."

]]> Mon, 09 Nov 2009 08:55:59 -0500 The LFB The LFB submits:

There were references to quantative easing at the G-20 meeting in Scotland this weekend, and the speed that the developed economies can be taken off the drip-feed of central bank liquidity.

"It is too early to start to lean against recovery," said U.S. Treasury Secretary Tim Geithner in his speech. "The classic mistake in past crises was to put on the brakes too quickly."


Complete Story »]]> UDN UUP XLF The LFB Implications of The Dollar Carry Trade http://seekingalpha.com/article/172201-implications-of-the-dollar-carry-trade?source=feed 172201 The currency carry trade is a strategy where the investor sells a currency with relatively low interest rate and buys a different currency yielding higher interest rates. Investors can also use the funds to buy other asset classes in different countries which would give superior returns.
The U.S. Government and the Federal Reserve has kept the interest rates at a record low level so that the U.S. economy recovers. According to the policy, keeping interest rates artificially low would ensure that small businesses, consumers and even large corporations would get easy funds and that would help in spurring the economy.

What the Federal Reserve has control over is to keep rates artificially low and throw enough money into the financial system. However, what the Federal Reserve has no control over is where this money goes (in terms of country or asset class).

click to enlarge

]]> Mon, 09 Nov 2009 08:50:04 -0500 Faisal Humayun The currency carry trade is a strategy where the investor sells a currency with relatively low interest rate and buys a different currency yielding higher interest rates. Investors can also use the funds to buy other asset classes in different countries which would give superior returns.
The U.S. Government and the Federal Reserve has kept the interest rates at a record low level so that the U.S. economy recovers. According to the policy, keeping interest rates artificially low would ensure that small businesses, consumers and even large corporations would get easy funds and that would help in spurring the economy.

What the Federal Reserve has control over is to keep rates artificially low and throw enough money into the financial system. However, what the Federal Reserve has no control over is where this money goes (in terms of country or asset class).

click to enlarge


Complete Story »]]> DBC DBV GSG TIP UDN UUP Faisal Humayun Markets Off to the Races? http://seekingalpha.com/article/172149-markets-off-to-the-races?source=feed 172149 On your marks...get set....go!

Markets are off to the races so far this Monday morning, as all manner of risky assets on Macro Man's screens have roared higher. It almost feels as if markets, having successfully survived the murderer's row of event risks last week, exhaled over the weekend and decided that plan A (liquidity-driven uber-rally) wasn't so bad after all.

]]> Mon, 09 Nov 2009 05:24:30 -0500 Macro Man Macro Man submits:

On your marks...get set....go!

Markets are off to the races so far this Monday morning, as all manner of risky assets on Macro Man's screens have roared higher. It almost feels as if markets, having successfully survived the murderer's row of event risks last week, exhaled over the weekend and decided that plan A (liquidity-driven uber-rally) wasn't so bad after all.


Complete Story »]]> Macro Man UUP Runs Out of Shares: Unlikely Anything Illegal Took Place http://seekingalpha.com/article/172156-uup-runs-out-of-shares-unlikely-anything-illegal-took-place?source=feed 172156 By Patrick Watson

Odd things are happening in PowerShares DB US Dollar Bullish ETF (UUP). On Thursday (11/5/09) PowerShares was forced to halt trading in this normally unremarkable fund while they filed an application with the SEC to issue more shares. Like most securities, ETFs are issued under a prospectus which allows the sponsor to issue a defined number of shares. This facilitates the creation/redemption process that keeps ETFs priced in line with their net asset value.

]]> Mon, 09 Nov 2009 05:18:22 -0500 Invest With An Edge Invest With An Edge submits:

By Patrick Watson

Odd things are happening in PowerShares DB US Dollar Bullish ETF (UUP). On Thursday (11/5/09) PowerShares was forced to halt trading in this normally unremarkable fund while they filed an application with the SEC to issue more shares. Like most securities, ETFs are issued under a prospectus which allows the sponsor to issue a defined number of shares. This facilitates the creation/redemption process that keeps ETFs priced in line with their net asset value.


Complete Story »]]> EUO UUP YCS Invest With An Edge Short Dollar Trade Off Low Momentum http://seekingalpha.com/article/172151-short-dollar-trade-off-low-momentum?source=feed 172151 Forex Trader Note: Near-term moves in Asian trading have not managed to get the four-hour global market momentum reads out of neutral mode. Most currencies are overbought against the Usd, on low momentum. Forex pairs will now require a boost from oil and S&P trade to hold the recent moves that came on thin order flows overnight.

The near-term technical reads show a market that is selling dollars on light volume. We will look for a reversal on euro, cable, and swissy before things can move too much further. Aussie and cad have not reacted to gold moving through $1100, and oil has not moved to back the short-dollar play. Neutral momentum and an oversold dollar, on a Monday, with not all major pairs aligned, is not a reliable read especially when Dax and S&P futures are not moving too far.

]]> Mon, 09 Nov 2009 05:00:21 -0500 The LFB The LFB submits:

Forex Trader Note: Near-term moves in Asian trading have not managed to get the four-hour global market momentum reads out of neutral mode. Most currencies are overbought against the Usd, on low momentum. Forex pairs will now require a boost from oil and S&P trade to hold the recent moves that came on thin order flows overnight.

The near-term technical reads show a market that is selling dollars on light volume. We will look for a reversal on euro, cable, and swissy before things can move too much further. Aussie and cad have not reacted to gold moving through $1100, and oil has not moved to back the short-dollar play. Neutral momentum and an oversold dollar, on a Monday, with not all major pairs aligned, is not a reliable read especially when Dax and S&P futures are not moving too far.


Complete Story »]]> DBV FXA FXB FXC FXE FXF FXY GLD IAU OIL UDN USO UUP The LFB Watching the USD Drop? Here's What You Should Really Be Watching http://seekingalpha.com/article/172146-watching-the-usd-drop-here-s-what-you-should-really-be-watching?source=feed 172146 76416689_7ccb418916_o - Copy

The USD vs the JPY is weakest in years. Yes, the DXY dollar index has been hitting new lows around 74. Yes, US government debt and deficits (the 2 infamous “D”s) have been skyrocketing and are projected to keep on growing in the coming years. Yes, the printing presses started by Ben Bernanke might be running faster than most people are comfortable with. And yes, the coming inflation will lead to further devaluation of the dollar which the government will not attempt to stop because they are happy to inflate away their piles of debt.

]]> Mon, 09 Nov 2009 04:37:52 -0500 Shishir Nigam 76416689_7ccb418916_o - Copy

The USD vs the JPY is weakest in years. Yes, the DXY dollar index has been hitting new lows around 74. Yes, US government debt and deficits (the 2 infamous “D”s) have been skyrocketing and are projected to keep on growing in the coming years. Yes, the printing presses started by Ben Bernanke might be running faster than most people are comfortable with. And yes, the coming inflation will lead to further devaluation of the dollar which the government will not attempt to stop because they are happy to inflate away their piles of debt.


Complete Story »]]> DDY UDN UUP YCS Shishir Nigam Quiet News Week Ahead. Will that Mean Rally, Consolidation or Pullback? http://seekingalpha.com/article/172124-quiet-news-week-ahead-will-that-mean-rally-consolidation-or-pullback?source=feed 172124 Now What? Does a Quiet News Week Mean Further Rally, Consolidation, or Pullback?

GLOBAL EQUITIES

The S&P 500 gained during every session this week, with the bulk of the gain coming on Thursday following solid results from Cisco (CSCO) and a surge in nonfarm productivity. The much talked about stock market correction continues to fail to materialize with the S&P 500 just 2.9% from its 2009 highs and up 60% from its March low.

]]> Mon, 09 Nov 2009 03:23:55 -0500 Cliff Wachtel Now What? Does a Quiet News Week Mean Further Rally, Consolidation, or Pullback?

GLOBAL EQUITIES

The S&P 500 gained during every session this week, with the bulk of the gain coming on Thursday following solid results from Cisco (CSCO) and a surge in nonfarm productivity. The much talked about stock market correction continues to fail to materialize with the S&P 500 just 2.9% from its 2009 highs and up 60% from its March low.


Complete Story »]]> CSCO DIA GCF GLD QQQQ SPY USO Cliff Wachtel Exchange Rates Revisited: U.S. Dollar and the Cost of Books http://seekingalpha.com/article/172116-exchange-rates-revisited-u-s-dollar-and-the-cost-of-books?source=feed 172116 As now, the dollar was in general decline against some currencies during September 2007. The Euro was strong against the dollar; the British pound reached $2 per pound and the Canadian dollar reached 1 to 1 parity with the dollar.

I have always kept track of the U.S./Canadian dollars by comparing the two prices inside new book dust covers. I wrote about this here on October 4, 2007 in a post titled McTeer on Dollars and Books.

]]> Mon, 09 Nov 2009 02:20:14 -0500 Bob McTeer Bob Mcteer submits:

As now, the dollar was in general decline against some currencies during September 2007. The Euro was strong against the dollar; the British pound reached $2 per pound and the Canadian dollar reached 1 to 1 parity with the dollar.

I have always kept track of the U.S./Canadian dollars by comparing the two prices inside new book dust covers. I wrote about this here on October 4, 2007 in a post titled McTeer on Dollars and Books.


Complete Story »]]> UDN UUP Bob McTeer The Good, Bad and the Ugly: Australian, U.S. and U.K. Economies http://seekingalpha.com/article/172085-the-good-bad-and-the-ugly-australian-u-s-and-u-k-economies?source=feed 172085 US Rates on Hold into 2010

The dollar weakened across the board following the announcement from the Federal Reserve that it is to keep rates at close-to-zero into 2010.

]]> Sun, 08 Nov 2009 09:56:09 -0500 TradingHelpDesk Michael Young submits:

US Rates on Hold into 2010

The dollar weakened across the board following the announcement from the Federal Reserve that it is to keep rates at close-to-zero into 2010.


Complete Story »]]> UDN UUP TradingHelpDesk