Playing the I fund

[Spartan]

Asia Is Getting Ready to Dump the Dollar Peg: Andy Mukherjee

May 8 (Bloomberg) -- Li Yong, China's vice minister for finance, said he had heard a ``rumor'' that the U.S. dollar was headed for a 25 percent drop. If the gossip was true, the consequences would be ``shocking,'' he said.




http://quote.bloomberg.com/apps/news?pid=10000039&cid=mukherjee&sid=aVreBEdY.5cg

This is not, nor would it be, an anomaly. When the FED hinted at stopping rate hikes in 1995 the Yen gained around 8% then another 17% or so in the following months. Same song for the German currency which gained around 16% on the USD then another 6% or so in following months. Read that somewhere, and the numbers may be off a tad. A 25% drop in the USD isnt far fetched, it is a norm, history supports it being a result of the end of US rate hike cycles.

 

[Fivetears]

The part I don't like...
Even as they continue to pile up U.S. debt in their foreign- exchange reserves to keep their currencies stable against the dollar, Asian nations, China among them, are preparing for a scenario where the dollar does indeed collapse under the weight of a record U.S. current account deficit.

http://quote.bloomberg.com/apps/news...d=aVreBEdY.5cg

Not great news for I Funders.

 

[Spartan]

If the dollar loses 25% vs. other currencies, the I fund will be the best bet.

 

[oldschool]

Details on what sectors are up in Japan so far today...

http://news.ft.com/cms/s/6d639436-de40-11da-af29-0000779e2340.html

 

[Master]

In fact, it wipes out all the C and S gains, and the poor guys in G lose 25% in value. What it is truly worse, is that most of them would not know that they lost that money.

Keep in mind, that inflation is also an useful weapon for the government, it adds taxation. Those are the two correcting measures (devaluation and increased taxation) that might allow us decrease our national debt and unpaid liabilities.

 

[Spartan]

They will not know they lost the money until they hit the pump. Or they hit the jewelry store to get the little lady a nice necklace. Foreign Auto prices will also rise. But they will feel the bite somewhere.

I agree about inflation. If we rack up a big enough bill, and our government has enough currency reserves in say Euro or Pounds, we could allow the dollar to slide and pay off our debt at a fraction of the price. But once again, we will still feel the bite somewhere.

 

[Spartan]

http://biz.yahoo.com/ap/060508/asia_dollar.html?.v=1

Dollar Tumbles Into 111-Yen Range
Monday May 8, 1:05 am ET
Dollar Tumbles Into 111-Yen Range, a 7-Month Low

TOKYO (AP) -- The U.S. dollar tumbled to a seven-month low against the yen in Asian trading Monday, extending losses that were triggered by last month's Group of Seven meeting, where finance officials warned about the bulging U.S. trade deficit and China's currency controls.



The dollar was trading at 111.72 yen early afternoon trading, down 0.71 from late Friday in New York and the lowest since September. The euro fell US1.2728 from US$1.2735.

The dollar has fallen from above 117 yen over the last two weeks after G-7 finance officials issued a statement during their April 21-23 meeting calling for flexible exchange rates, signaling to China they want a stronger yuan. That prompted traders to buy the yen due to Japan's close trade ties and geographical proximity to China.

G-7 officials also expressed concern about the ballooning U.S. trade deficit, which leaves dollars in the hands of exporters and has put pressure on the dollar for years.

Adding to bearish sentiments for the dollar were U.S. employment figures released Friday that showed a slowdown in hiring, said Kikuko Takeda, currency strategist at Bank of Tokyo-Mitsubishi UFJ in Tokyo.

Takeda said the dollar's fall isn't likely to last beyond a few weeks because the factors behind the dive aren't particularly new.

"The reaction is a bit exaggerated now from G-7 shock," she said, adding that the dollar is likely to stabilize at about 110 yen.

A stronger yen hurts Japan's exporters by making their products more expensive overseas and eroding the value of overseas earnings when converted back to yen.

Chief Cabinet Secretary Shinzo Abe said he was closely watching the recent fluctuations in currency trading.

"Foreign exchange moves should reflect economic fundamentals," he told reporters. "We plan to continue to watch the moves closely."

The dollar was also lower against other regional currencies, slipping to 8,733 Indonesian rupiah from 8,780 in the previous session, and to 37.545 Thai baht from 37.810.

 

[Spartan]

Why do you think Buffet is buying companies outside the US? He is sick of playing a losing game. 42.9 billion US dollars, Berkshire controls, that will be a lot less by this time next year.




Buffett: Berkshire Ready to Buy Anywhere
Sunday May 7, 8:02 pm ET
By Josh Funk, AP Business Writer
Billionaire Investor Warren Buffett Says Berkshire Hathaway Is Ready to Buy Anywhere

OMAHA, Neb. (AP) -- Billionaire Warren Buffett said on Sunday that his investment company, Berkshire Hathaway Inc. is willing to buy companies anywhere in the world if the circumstances are right.

Berkshire announced its first purchase of a company based outside the United States Friday, and Buffett and vice chairman Charlie Munger said the acquisition of Israel-based Iscar Metalworking Cos. probably won't be the last foreign purchase for the Omaha-based company.


"There are dozens of countries in which we would be happy to buy the right business," Buffett said.

During Sunday's news conference Buffett and Munger especially praised Korean and Japanese businesses. A day earlier, Buffett and Munger spent more than five hours answering questions at the company's annual meeting.

"Our problem outside the United States is we aren't all that well known," said Munger, 82.

Both men said they hope Berkshire's announcement that will pay $4 billion for 80 percent of Iscar, which makes metal cutting tools, will help raise the company's profile overseas. Berkshire owns a diverse mix of more than 60 companies, including insurance, furniture, carpet, jewelry, restaurants and utility firms. And it has major investments in such companies as H&R Block Inc., Anheuser-Busch Cos. and Coca-Cola Co.

Buffett and Munger said they have a financial incentive to shop overseas.

"We don't find screaming bargains in the United States anywhere," Buffett said.

Berkshire does own securities in Europe but Buffett said the company won't disclose them until it has to.

Buffett said Berkshire's criteria for foreign investments doesn't differ from the list that has been published in the company's annual report for years. Berkshire is interested in simple businesses with at least $75 million in earnings, a proven track record, management in place and an offering price.

But Munger said there are some additional considerations.

"We don't like kleptocracies," Munger said. A kleptocracy is a country where theft is common in government and business, he said.

"We need a rule of law," Munger said.

The 75-year-old Buffett again faced questions about who will follow him as Berkshire's chairman and chief executive. Previously, Buffett has said that his son, Howard, should be the next chairman and that the board has agreed who the next chief executive should be.

Buffett again refused to identify the person the board chose from among three Berkshire managers to be the next chief executive.

The four Berkshire managers that keep coming up as possible chief executives are: Ajit Jain, who runs Berkshire's reinsurance division; GEICO chief executive Tony Nicely; Richard T. Santulli of NetJets; and David Sokol, CEO of Iowa-based utility MidAmerican Energy.

Buffett said Howard Buffett should be Berkshire's next chairman to help protect the company's culture, but he said it will be up to the board to elect the next chairman and he'll be dead when that happens.

"I won't be there," Buffett said. "On that day there will be 10 directors instead of 11."

Buffett pledged to find good uses for the $42.9 billion cash the company held at the end of the first quarter, on March 31. He said that in a year or two, Berkshire may not have nearly as much cash, but he doesn't feel pressure to make what could prove to be bad deals.

"We hope we spend it all next week, and we may find out that we don't spend any of it for five years," Buffett said.

 

[Master]

Despite the predictions of a roaring japanese bull to make the I fund climb a lot more, morning indicators only show a mild gain, perhaps ~ +0.10-+0.20%.

 

[James48843]

And the dollar is firming up and now has crossed the line into positive territy on the Euro.

Perhaps this is flatting out. I'm watching closely and ready to take some gains off the "I" fund table and pocket them into "G" to take a breather, maybe today, depending on what it looks like before noon. If not today, then the next couple days are very, very likely for me to pull back- as I think it is time that the "I" takes a rest here, and soon.

 

[LA_Guy]

NIKKEI 225 up +0.80%, not as much as I had anticipated. Today is probably a good day to shuffle some money back into G fund.

 

[pointman72]

Looks like +.464 for today.

 

[SkyPilot]

Looks like +.464 for today.

Cool! Thought it might! Wonder if it could pull off a gain like that again tomorrow? :cheesy:

 

[grandma]

Looks like +.464 for today.

that was at 2pm, didn't it drop more??

 

[Robo5555]

Hello...I've had my $ in the I fund all year with the ecxeption of a few days last month. The few days cost me about a .25 gain so I went back in. Its been an awesome run for 4 months plus and I'm starting to think about taking some profit to the G fund...The boring G fund. In the other hand this could be a MONSTER year for the I fund and I hate to get off this train. Its all in risk taking. No one knows what the markets are going to do. All we have are the indicators which should lead us to the smart choice but many times the market just blows off the indicators and moves in opposite direction.

 

[Master]

It looks that it was a 9 cents gain in a very tight market. The I-fund share is at $20.84.

 

[biggdog1]

Dollar $$$ index is up as of 04:00 :nuts: . Nicky and Footsie also down :worried: . Could be signs of I-Fund rebalancing and giving back some of those beeg gains. An opportunity to buy in later.

 

[JOVARN]

http://www.iii.co.uk/news/?type=afxnews&articleid=5636649&subject=markets&action=article
(AFX UK Focus) 2006-05-09 04:57 GMT:
Forex - US dollar higher on short-covering after Tanigaki comments
At 12.20 pm Tokyo (0320 GMT) the euro was quoted at 1.2686 usd, compared to 1.2693 in early Sydney trade and 1.2711 in New York late yesterday. The dollar was trading at 113.79 yen here from 111.33 in Sydney and 111.62 in New York.

While the US unit staged a mild bounceback today it is expected to remain under pressure as investors anticipate a near term end to US interest rate hikes, dealers said.

The FOMC meets this week and is widely expected to hike its target rate a further 25 basis points. However opinions are divided on whether this could be the last in a long cycle of increases, with investors keenly awaiting the statement accompanying the FOMC's policy decision for any hints on its future rates strategy.

"The FOMC statement is not likely to offer strong leads that will change the bearish sentiment towards the dollar," Uno said.

"And if the market is convinced (by the statement) that there will be no more rate hikes in the US after the latest increase, the dollar is likely to be sold back to test the 110 yen level," he said.

Tokyo 12.20 pm (0320 GMT) Sydney 10.45 am (0045 GMT)

 

[JOVARN]

http://money.inq7.net/breakingnews/view_breakingnews.php?yyyy=2006&mon=05&dd=09&file=24
Dollar claws higher but outlook shaky ahead of Fed
Posted: 5:55 PM | May 09, 2006

The market is also focusing on the US Treasury's report on currency practices of trading partners due on Wednesday, with some analysts speculating that the government might name China as a currency manipulator. Analysts said that such an action by the United States could trigger further gains in the yen, which is often treated as a proxy for China's yuan. By 0823 GMT, the euro was down 0.21 percent on the day at 1.2676 dollars, after hitting a one-year high of 1.2787 dollars on Monday. The dollar was up slightly at 111.85 yen after hitting an intraday trough of 111.23 yen overnight in Asian trade -- near an eight-month low of 110.97 yen hit on Monday. RATE OUTLOOK BOOSTS YEN The yen hit a six-week high against the euro after a media report stoked expectations the Bank of Japan will raise interest rates as soon as July.

 

[Brett]

I check this page a few times yesterday, Monday, and thought I had given back about .1%. To my surprise, I have a nice little gain. Usually the index is right on the money, what gives?