Seeking Alpha

gopijm's  Instablog

Send Message
I am Electrical Engineer working in the field of Information technology. I am Interested in world economics and politics. Beginner investor interested in reading books and blogs on investing ideas and listen to what the leading economists have to say.
  • My Views To Spur The Tepid Economy

    The Fed reiterated on September 18th that taper will depend solely on long term unemployment and underemployment data. Economic growth is generally proceeding at a moderate pace and there is uneven improvement in labor market conditions. A month or two more from now will not make it any better. Mr. Bernanke's quote from the Sept. 18th FOMC meeting "Conditions in job market today are still far from what all of us would like to see." clearly indicates that we are no close to taper and with the coming holiday season there is very little likelihood of a job market improvement other than temporary hiring for holiday sales. Ben Berneke is dovish but we have a group of hawkish people in the Fed who keep on issuing statements that the taper is going to come sooner this October. In a way this induced scare is good because it keeps the market away from breaking all-time records and thus preventing a stock market bubble.

    The best way I see to improve the economy and labor market is by bringing down the crude oil price to 70 to $80 a barrel. This will put more money into the hands of people also spur job creation that would in turn stimulate economic growth. And I see a case for the same over the next few months. With the EIA(Energy Information Administration) yesterday stating that the U.S. stock piles increased by 2.64 million barrels, compared to 1 million barrels decrease that most analysts were expecting. Gasoline consumption declined 2 percent to 8.85 million barrels per day.

    According to Steve Briese who studies the CFTC(U.S Commodity trading futures commission) report has seen consensus among the hedgers(produces/refiners) a case for lower oil prices. These hedgers are not speculators. Producers are the ones who take a short position to protect against price declines and refiners are the ones who take a long position in futures and option to protect any rise in oil price. Hence falling oil prices can be good for the economy and also the refiners. I am long HFC!

    Disclosure: I am long HFC.

    Sep 27 12:20 PM | Link | Comment!
  • Mortgage Rates And 10 Yr. Treasury

    On September 18th Ben Bernanke surprised the market with no taper after the FOMC (Federal open market committee) meeting which caught most of the economist by surprise who were expecting a min of $10 billion in taper. Ben thinks that economy is not stable enough to take the life support/dope off.

    What does this indicate for new home buyers or for the people who are waiting for refinance? Good news! The fed wants more and more people to buy homes by keeping the interest rate low. I think there will be no taper until Ben retires in February in contrary to what some of the analysts who think that the taper would take effect in October once the sequestration issue is fixed end of this month. The reason, tapering this time would spoke the markets.

    (click to enlarge)

    (click to enlarge)

    The 30/15 yr. mortgage is very much co-related to the 10 yr. treasury rate. This is depicted in the picture above. So as long as 10yr treasure rate goes down the mortgage rate will also follow. But I personally think it may not go down far. The treasury rate has very good support at 2.60 which is 14 basis points below today close. So keep an eye on the 10 yr. rate and good luck!

    Please note: This is only my opinion and not an advice.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 23 2:13 AM | Link | Comment!
Full index of posts »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.