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Playing the I fund
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- Start date
James48843
Well-known member
Nikkei, CAC, DAX, FSTE all down today, and dollar slightly up against the Euro, down against the Yen.
Overall, "I" fund should to take a small hit today.
Overall, "I" fund should to take a small hit today.
350zCommTech
Well-known member
Weatherweenie posted this econ. info at the Market Talk thread. Despite a 3.5% GDP, it seems to be non-inflationary and thus good for equities. Any thoughts?
Re: Market Talk / Jan. 28 - Feb. 3
08:35 am : S&P futures vs fair value: -2.5. Nasdaq futures vs fair value: -4.3. An advance read on GDP just showed that the economy grew at a faster than expected 3.5% pace in Q4 (consensus 3.0%). The chain deflator -- a key inflation measure -- ticked lower to 1.5% (consensus 1.6%) from 1.9%, also lending support for a soft landing. The Employment Cost Index checked in at 0.8% (consensus 1.0%).
08:35 am : S&P futures vs fair value: -2.5. Nasdaq futures vs fair value: -4.3. An advance read on GDP just showed that the economy grew at a faster than expected 3.5% pace in Q4 (consensus 3.0%). The chain deflator -- a key inflation measure -- ticked lower to 1.5% (consensus 1.6%) from 1.9%, also lending support for a soft landing. The Employment Cost Index checked in at 0.8% (consensus 1.0%).
Rod
Well-known member
Good point about the GDP. I don't think the recovery would be today though... just within a few days. One thing I learned from the summer sell-off is to hang in there if you ever get caught in a down-draft. I'm hoping for the USM to rally after the rate announcement.
350zCommTech
Well-known member
Good point about the GDP. I don't think the recovery would be today though... just within a few days. One thing I learned from the summer sell-off is to hang in there if you ever get caught in a down-draft. I'm hoping for the USM to rally after the rate announcement.
And that is a big problem becuase of our deadline. If the USM rallies after the Fed, the I fund might get a +FV. If the USM tanks after the Fed, the I fund might get a -FV, follwed by a huge sell-off in the Asian markets later that night. Also, if the USM does sell-off after the Fed, it would be because of hawkish comments from the Feds, which means the dollar will be going up.
Rod
Well-known member
The dollar is falling now... or is it just trying to find some level ground to stand on?
James48843
Well-known member
Looks like the Fed is going to have to keep thinking about raising rates in the future.
It's a depression in my state *(michigan) with hemmoraging job losses here. This week Pfizer annouced 2,500 job cuts. Add that to the 30,000K ford job losses, the like amount of GM job losses, the various smaller company losses, and we continue the downward spiral here.
Home foreclosures setting an all-time high record this month.
Sheesh. We could use a break.
It's a depression in my state *(michigan) with hemmoraging job losses here. This week Pfizer annouced 2,500 job cuts. Add that to the 30,000K ford job losses, the like amount of GM job losses, the various smaller company losses, and we continue the downward spiral here.
Home foreclosures setting an all-time high record this month.
Sheesh. We could use a break.
ATCJeff
Well-known member
James,
I think you got it backwards....A increase in rates would slow growth. A rate decrease would stimulate growth and create new jobs.
Griffin
Well-known member
The last half dozen or so Fed meetings have not generated wild fluctuations immediately. Based on what we've seen recently, it seems that it will take more then hawkish rhetoric to get the market moving radically in one direction, short of an actual rate hike in which case...watch out. Remember all the tension that surrounded May's meeting, it still took two days for the market to decide to tank.
Birchtree
Well-known member
What would get the Fed to ease? The core inflation rate (now 2.6% for the core CPI and 2.1% for the PCE deflator) would have to drop to 2% or less. Signs would have to emerge that the housing sector downturn is deepening and spreading to the rest of the economy. The unemployment would have to rise to 5%. Even with a 3.5% preliminary GDP reading inflation is ebbing. It won't be long before they ease. Watch for neutral language in the comments this afternoon.
350zCommTech
Well-known member
Birch, did you actually write this? Are these thoughts your propety? I'm asking because I'm in agreement with your thoughts.
Today's economic numbers are very confusing. GDP at 3.5% with low inflation??? Chicago PMI dips bleow 50 again at 48.8??? Dollar and bonds yields are reacting more to the PMI numbers and is significantly cutting the loses in the I fund. IF the Thursday's ISM follows the PMI and falls below 50, bond yields and the dollar might be starting a new trend(down). I'm thinking about jumping back into the I fund.
Rod
Well-known member
Now that's what I like to hear.
350zCommTech
Well-known member
Early Estimate: Down .183% or 4 cents.
Rod
Well-known member
I can handle that.
Birchtree
Well-known member
Z man,
The older you get you will realize it becomes much easier to pull things out of one's a$$ on demand. The yen is in a technical rebound today being played by hedge funds. The euro folks are not happy concerned about exports and trade balances with Japan. The yen has hit a four-year low against the dollar and an all-time low against the euro. Since the start of the year, the yen has fallen more than 2% against the dollar. The yen is the weakest major currency in the world at this point. May be getting close to start looking at the 2007 Acura RL for the Mrs. I do believe the I fund is on an intermediate slippery slope.
Dennis - permabull #1
The older you get you will realize it becomes much easier to pull things out of one's a$$ on demand. The yen is in a technical rebound today being played by hedge funds. The euro folks are not happy concerned about exports and trade balances with Japan. The yen has hit a four-year low against the dollar and an all-time low against the euro. Since the start of the year, the yen has fallen more than 2% against the dollar. The yen is the weakest major currency in the world at this point. May be getting close to start looking at the 2007 Acura RL for the Mrs. I do believe the I fund is on an intermediate slippery slope.
Dennis - permabull #1
James48843
Well-known member
No, I don't think I have it backwards- for the last year and a half FED has been raising rates, and then for the last four or five months (or whatever it's been) it's been holding, but still with a leaning towards the big inflation monster, and the FED has been talking about the possiblity of continuing to raise rates if inflation rears it's ugly head.
Having a GDP of 3.5% is going to say to the FED that the economy is humming along, and they are going to have to continue to lean towards higher rates, rather than have the GDP number much lower, in which case the FED might have more incentive to lower rates to kick start the economy. That's what I meant to say, anyway.
Meantime, my state continues to be butchered with job losses and foreclosures- we could really use a state specific stimulus of some kind. But higher rates would kill us more, if in fact that is what the fed decides to do. That was what I was trying to say- we need something major favorable in my state to stop the bloodshed of job losses and the depression that is settling in here. While it's not yet as bad as it was in the early 1980's, when we had unemployment at 18% and inflation at 18%, and interest rates at 21%, it still is bad here. Unemployment now here over 7%, and home foreclosures doubled this past year, and accelerating higher. Tax revenues off here, and now the state's credit rating has been affected with a downgrade, making it even worse.
No, we need something here to help.
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