350zCommtech's Account Talk

[Frixxxx]

For you currency buffs. This author is predicting the USD/YEN to hit 85 by 2Q 2009.

Maybe even sooner. Thanks for the article cause it helped me these past two days.

I prepped a long run and it's now unfolding.

Hope you got some of the action!

 

[350zCommTech]

Yen Declines as Nakagawa Says Japan May Take Currency Action

By Stanley White

Dec. 18 (Bloomberg) -- The yen fell from near a 13-year high against the dollar after Japanese Finance Minister Shoichi Nakagawa signaled the nation is ready to sell the currency.
The yen also declined against the euro after Nakagawa told reporters that “we will take necessary steps if needed” to limit the currency’s advance and protect the overseas earnings of Japanese exporters. The dollar fell to an 11-week low against the euro on speculation the Federal Reserve’s near-zero interest rate policy will reduce the appeal of U.S. assets.
“We are at such low levels now that yen intervention becomes a possibility, and that’s making some people nervous,” said Saburo Matsumoto, senior manager of foreign-exchange sales at Sumitomo Trust & Banking Co. in Tokyo.
Japan’s currency fell to 87.77 per dollar as of 11:31 a.m. in Tokyo from 87.24 yen yesterday in New York, when it reached 87.14, the highest level since July 1995. It declined to 126.41 per euro from 125.80 yesterday. The dollar was at $1.4418 per euro from $1.4419 after reaching an 11-week low of $1.4456. The yen may decline to 88 per dollar today, Matsumoto said.
Japan may intervene in foreign-exchange markets as the yen’s recent gains are abnormal, Chief Cabinet Secretary Takeo Kawamura also said today in Tokyo. The government expects the Bank of Japan to respond appropriately to the yen, he said. Central banks intervene when they buy or sell currencies to influence their exchange rates.
Against the Australian dollar, the yen fell to 61.84 from 61.40 late yesterday in New York. It also declined to 52.11 per New Zealand dollar from 51.70, and to 8.9355 versus the South African rand from 8.8879.
Japanese Stocks
The yen also declined toward a five-week low against the euro as gains in local stocks gave investors more confidence to purchase higher-yielding assets. The Nikkei 225 Stock Average advanced 0.9 percent, after earlier falling by the same amount. Japan’s benchmark interest rate of 0.3 percent compares with 4.25 percent in Australia, 5 percent in New Zealand and 11.5 percent in South Africa.
Honda Motor Co., Japan’s second-largest automaker, yesterday cut its operating profit forecast for a third time for the year ending March 31 to 180 billion yen ($2.05 billion) from a prior estimate of 550 billion yen as the currency’s gains pushed up prices for overseas customers.
Previous Intervention
The last time Japan intervened on its own, it sold a record 20.4 trillion yen in 2003 and 14.8 trillion yen in the first quarter of 2004, when the yen rose as high as 103.42 per dollar. Japan hasn’t bought yen since 1998, when it spent 3.05 trillion yen as the currency reached as low as 147.66.
The Group of Seven, which comprises the U.S., Japan, Germany, the U.K., France, Italy and Canada, propped up the dollar in 1995, when it declined to a post-World War II low of 79.75 yen.
The greenback declined against the euro as longer-term Treasury yields fell and U.S. stocks declined on speculation the Fed has few tools left to combat a recession.
The yield on 10-year Treasuries fell two basis points, or 0.02 percentage point, today to 2.19 percent. It touched 2.0711 percent yesterday, the lowest level since the Fed’s daily data on the securities began in 1962. The Standard & Poor’s 500 Index fell 1 percent.
Near Zero
The Fed lowered its target rate on Dec. 16 to a range of zero to 0.25 percent, from 1 percent, the lowest rate among major economies. The central bank reiterated plans to buy agency debt and mortgage-backed securities and said it will study buying Treasuries.
“The next step is for the Fed to start buying Treasuries, which will depress yields further and lead the dollar lower,” said Hideki Amikura, deputy general manager of foreign exchange at Nomura Trust and Banking Co. Ltd., a unit of Japan’s largest brokerage. “The U.S. stock market shows few signs of life. I don’t think people are waiting to buy the dollar on the cheap.”
The dollar may fall to 85 yen next week, he said.
Investors should sell the U.S. dollar at 89 yen as it may decline as to 83 yen, National Australia Bank Ltd. said. They should exit the trade if the greenback strengthens to 91 yen and watch for intervention in February and March if the currencies trade at 80 yen or below, wrote a team led by Sydney-based John Kyriakopoulos, head of currency strategy at the bank, in a note yesterday.
The U.S. federal budget deficit widened last month to $164.4 billion compared with a gap of $98.2 billion in November a year earlier, the Treasury Department reported last week.
“The U.S. dollar will find 2009 a tougher year thanks to the U.S. budget deficit climbing to at least $1 trillion at the same time that interest rates fall close to zero and the Federal Reserve ramps up quantitative easing,” Kyriakopoulos said.
The U.S. currency will trade at 93 yen and $1.45 per euro by the end of 2009, the bank forecast.
The U.S. currency depreciated 22 percent against the yen this year, the most since 1987, as more than $1 trillion of credit-market losses sparked a seizure in money markets and threw the world’s largest economy into a recession.
To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net.
Last Updated: December 17, 2008 22:08 EST
http://www.bloomberg.com/apps/news?pid=20601087&sid=a.4BYvKJifSo&refer=home

They finally lost the battle of 90. The BOJ will have to cut their rate tomorrow to put pressure on the Yen. They're at .30% . U.S. is at .25%. It needs to be below the Fed rate, but obviously, this game has become meaningless.

DEFLATION!:worried:

 

[Show-me]

Kind of like playing penny poke in the barracks.

 

[350zCommTech]

BOJ will cut rates after their sushi break. Place your bets.


ME: .15% cut Nikkei up 300 points.

 

[Show-me]

Wow, a 50% reduction of the current rate. That should fix everything.

 

[Show-me]

If they do it will show me how weak and worried they are.

 

[350zCommTech]

If they do it will show me how weak and worried they are.

Both US and Japan are essentially at ZIRP. The USD has become a carry trade much like the YEN. The major differentials are now EUR/USD(YEN) and GBP/USD(YEN). But as the world recession gets worst, this game will also come to an end as everybody moves towards ZIRP.

 

[350zCommTech]

BOJ cuts .20%. Rate is now .10%. GAME OVER!

 

[Show-me]

BOJ cuts .20%. Rate is now .10%. GAME OVER!

LOL, I raise you 2 more pennies!

 

[DCguy]

Both US and Japan are essentially at ZIRP. The USD has become a carry trade much like the YEN. The major differentials are now EUR/USD(YEN) and GBP/USD(YEN). But as the world recession gets worst, this game will also come to an end as everybody moves towards ZIRP.

so is this good or bad for the economy? I'm guessing US and JP currencies will be worthless in about a year and the demand for 3rd world country currencies will skyrocket and I fund will do very well compared to C and S as we had seen in the past.

 

[Frixxxx]

BOJ cuts .20%. Rate is now .10%. GAME OVER!

In my case...GAME ON!!!!!

 

[fedgolfer]

on a sidenote GSers in DC get a 4.78% pay increase for 2009... pretty good for the rest of the country too. The flipside... the printing press continues.

Acting Director’s Memo - January 2009 Pay Adjustments

http://www.chcoc.gov/Transmittals/TransmittalDetails.aspx?TransmittalID=1786

Acting Director’s Memo - 2008 Annual Review of Special Rates

http://www.chcoc.gov/Transmittals/TransmittalDetails.aspx?TransmittalID=1850

Acting Director’s Memo - Fiscal Year 2009 Prevailing Rate Pay Adjustments

http://www.chcoc.gov/Transmittals/TransmittalDetails.aspx?TransmittalID=1866

2009 General Schedule and Locality Pay Tables

http://www.opm.gov/oca/09tables/index.asp

2009 Special Rate Tables

http://apps.opm.gov/ssr/tables/index.cfm

 

[350zCommTech]

so is this good or bad for the economy? I'm guessing US and JP currencies will be worthless in about a year and the demand for 3rd world country currencies will skyrocket and I fund will do very well compared to C and S as we had seen in the past.

This is bad. Just look at the Nikkei from 1989 to present.

 

[350zCommTech]

Currency and bonds are not confirming this rally. I think this is all OPEX games, as the bailout news was announced prior to the market open, screwing the shorts once again.

Hank Paulson is the devil. This auto bailout is tied to congress releasing the next $350B TARP money. Which he recently said he would not be asking for. The automakers will not be viable in 3 months. No way they can give the back the money. It will be spent while plants are closed. Other words, our tax money down the drain.

We now know what happened to the first TARP money. What do you think is going to happen to the next $350B? Will congress give the OK for the next $350B TARP money?

 

[Frixxxx]

so is this good or bad for the economy? I'm guessing US and JP currencies will be worthless in about a year and the demand for 3rd world country currencies will skyrocket and I fund will do very well compared to C and S as we had seen in the past.

Third world countries do not have the "backing" they need to support such a direction. Currency value is based on a ton of factors. It used to be based on gold reserves way back when. Now it is based on alot of other things AND country specific.

You can't just arbitrarily say the Mexican Peso has worth. It has to have the perceived stability and it must be backed by the rest of the world.

The Euro and Great Britain Pound are almost equal. I see these two currencies as a force to be reckoned with over the next two years. Yes, the USD is weak and there are issues with the economy. But, internationally it is still recognized as the base currensy for now.

Here is a quick currency guide: http://www.gftforex.com/resources/currency/index.asp

 

[DCguy]

Third world countries do not have the "backing" they need to support such a direction. Currency value is based on a ton of factors. It used to be based on gold reserves way back when. Now it is based on alot of other things AND country specific.

You can't just arbitrarily say the Mexican Peso has worth. It has to have the perceived stability and it must be backed by the rest of the world.

The Euro and Great Britain Pound are almost equal. I see these two currencies as a force to be reckoned with over the next two years. Yes, the USD is weak and there are issues with the economy. But, internationally it is still recognized as the base currensy for now.

Here is a quick currency guide: http://www.gftforex.com/resources/currency/index.asp

Thx. I may be wrong, but I'm just wondering why would anyone hold onto their USD if its only worth face value and they get no interest.

 

[350zCommTech]

Possibility?

View attachment 5257

 

[350zCommTech]

Today reminds of the that day in early OCT, when the TARP was passed by the house on the second try.

 

[JTH]

Possibility?

Thanks for pointing out the H&S, boy that looks like it came straight out of a textbook. :worried:

 

[350zCommTech]

Interesting...

Belgian government collapses over Fortis affair


Fri Dec 19, 2008 1:41pm EST

By Philip Blenkinsop
BRUSSELS (Reuters) - Belgium's government collapsed on Friday after a top court found signs that it had sought to sway a legal ruling on the future of stricken bank Fortis.
"(Belgian Prime Minister Yves) Leterme put the (resignation) proposal to the cabinet and they have agreed to it," Leterme's spokesman Peter Poulussen said by telephone.
Under the constitution, King Albert must decide whether to accept the resignation. In July, Leterme had tendered his resignation after failing to break a political deadlock among the country's linguistic groups, but the king refused it.
The Leterme spokesman declined to say when the prime minister would go to the king this time.
Observers said the likely next steps would be a reshuffled cabinet without Leterme or early elections, an option few of the ruling parties would want amid a deepening economic crisis and with the Fortis debacle on voters' minds.
"We'll have to look at how we assure stability in our country -- political stability we don't have at the moment. I hope that we'll at least find a way of managing things in 2009," Finance Minister Didier Reynders told Belgian television.
Leterme had been under pressure to quit over accusations that his office had sought to influence an appeal court ruling that last week froze the break-up of Fortis.
Earlier, an eagerly awaited report by Belgium's Supreme Court did not specifically target Leterme but concluded:
"All the above (in the report) of course does not offer ... legal proof of an attempt to interfere with the judiciary, but there are undoubtedly significant indications which point in that direction."
Leterme has denied influencing the appeal court, although he acknowledged that one of his officials had contacted the husband of one of the judges several times.
Fortis was carved up by the Dutch, Belgian and Luxembourg governments with France's BNP Paribas buying the Belgian operations after an 11.2 billion euro ($16.1 billion) cash injection failed to calm investor concerns over its health.
Shareholders launched legal action, and the court victory has thrown the government's bailout plans into disarray.
They have seen their shares drop from almost 30 euros in April 2007, when Fortis launched its ill-fated bid for Dutch rival ABN AMRO, to just over 1 euro now.
BNP too has suffered, its shares dropping some 30 percent this week on increasing speculation that a collapse of the Fortis deal could weaken the bank's capital position and force it to turn to shareholders for cash.
The addition of Fortis's retail customers would make BNP the biggest bank in terms of deposits in the 15-country euro zone. Continued...
http://www.reuters.com/article/worldNews/idUSTRE4BI4UW20081219