Show-me Account Talk

[Show-me]

Well lookie there Fannie and Fred getting punished and they got a guy on CNBC telling people not to invest in this market because you can not pick the bottom. Instead he said you should trade this market until the bottom is in.

 

[Bullitt]

Well lookie there Fannie and Fred getting punished...

Greedy and crooked for all of these years and finally Fannie and Freddie are getting theirs. Stick a fork in 'em. Forget about it. We're going to wake up one of these mornings to see that the US Treasury owns both of them.

Maybe next Monday if this run continues. Most of these Credit Crunch-Blockbuster deals seem to happen on weekends.

I'm still out of the loop CNBC wise. What does Santelli have to say about the tide going out on FNM and FRE?

 

[Birchtree]

I've recently purchased both FNM and FRE so I guess I can always use the tax loss write off against some of my gains I've already taken this year. But I'll hang tough - this might just be more irrational panic against the financials.

 

[robo]

Greedy and crooked for all of these years and finally Fannie and Freddie are getting theirs. Stick a fork in 'em. Forget about it. We're going to wake up one of these mornings to see that the US Treasury owns both of them.

Maybe next Monday if this run continues. Most of these Credit Crunch-Blockbuster deals seem to happen on weekends.

I'm still out of the loop CNBC wise. What does Santelli have to say about the tide going out on FNM and FRE?

Some talk about credit....

http://www.cnbc.com/id/15840232?video=826361554&play=1

 

[Show-me]

YouTube day at Show-me's place. Enjoy.

 

[Show-me]

I'm always a day late to the party. I have a love of silver and got fixated on the chart gaps and did not look at the underlying fundamentals. My shift is because of this.

ECB will have to start lowering rates to fuel their weakening economy. Bad for the I fund and bad for commodities because this will weaken their currency on the world field.

The U.S. is struggling with high commodities prices which is inflation. The Fed lowered rates to fuel the economy and help the lender. That is not working anymore so now I think they will shift to fighting inflation and that means raising rates and strengthening the dollar.

ECB lowering rates and US raising rates will make for some big rallies in the dollar and I think the market is already on it with this big run up on the dollar. The market always knows before we do.

Oil will fall only so much remember China is consuming what ever we conserve. Demand will stay strong no matter how much we save.

My two cents. I need to find my exit on SLV take my lumps and move on to the next trade. SKF was the trade but I missed it with my SLV play. I will hold for at least a few more days and see if we get a pull back in the greenback.

 

[Guest2]

Show-Me, Valuable posts and I wish to thank you sincerely !

 

[luv2read]

ECB will have to start lowering rates to fuel their weakening economy. Bad for the I fund and bad for commodities because this will weaken their currency on the world field.

Ok I understand the necessity for ECB to lower rates (and that it will weaken euro currencies), same as fed did here. But the fed rate cuts were good for USM (bad for dollar), so wouldn't ECB cuts be good for OSM and therefore I fund? I know that lowering eurorate is bad for euro and good for dollar, but if the OSM goes up in response to ECB rate cuts like the USM did in response to fed cuts, wouldn't that offset any rise in the dollar affecting the I fund?

ECB lowering rates and US raising rates will make for some big rallies in the dollar and I think the market is already on it with this big run up on the dollar. The market always knows before we do.

I understand this and agree with it.

comments please? I'm just trying to get a grasp on it.

 

[hessian]

Only intending to offer, my personal understanding: that many overseas countries are experiencing run-away inflation of their own, even much more severe than here is the U.S. The Aussies, Indonesia, etc., as well as Europe, most have so far successfully fought off raising their rates, as a consequence - however, with so many are facing major inflationary pressures of their own, I see overseas favoring raising their rates.

I read this in recent weeks, here's some sources.:worried:
http://www.iht.com/articles/reuters/2008/05/06/asia/OUKWD-UK-ASIA-INFLATION.php

http://www.forbes.com/2008/06/30/eu...pdate-markets-equity-cx_je_0630markets26.html

http://www.iht.com/articles/reuters/2008/05/06/asia/OUKWD-UK-ASIA-INFLATION.php

 

[luv2read]

Only intending to offer, my personal understanding: that many overseas countries are experiencing run-away inflation of their own, even much more severe than here is the U.S. The Aussies, Indonesia, etc., as well as Europe, most have so far successfully fought off raising their rates, as a consequence - however, with so many are facing major inflationary pressures of their own, I see overseas favoring raising their rates.

I read this in the last week somewhere - I'll try to find a source.:worried:

Thanks, Hessian, I read that also. What I'm asking is - if ECB lowers rates to prop up the weak economy (like the fed did), instead of raise them to fight inflation...wouldn't the OSM's respond favorably, just as USM's did? And wouldn't that positive response offset any devaluation of their currencies that would affect the I fund - unless and until the fed raises rates and strengthens the dollar?

 

[hessian]

L2R,
Sorry, apparently misread,
Answer is difficult, so I'll try this way...
The low relative value of our US curreny (in recent past), has helped US sell its products overseas. So its actually given us an edge, export-wise, since overseas, they could buy our goods more cheaply.

Now however with their inflation gone so large, our export products are not so cheap anymore.

Perhaps, the best way to answer is, if they raise THEIR rates, then that "effectively" has the same effect as if we lowered ours (and visa-versa).
Hope this helps.

 

[Show-me]

Thanks, Hessian, I read that also. What I'm asking is - if ECB lowers rates to prop up the weak economy (like the fed did), instead of raise them to fight inflation...wouldn't the OSM's respond favorably, just as USM's did? And wouldn't that positive response offset any devaluation of their currencies that would affect the I fund - unless and until the fed raises rates and strengthens the dollar?

First rule to alway remember is that the US is the big consumer. Two-thirds consumer driven economy. Another analogy is "when the US gets the sniffles the world catches a cold."

Now that may or may not be shifting with the emerging countries becoming new consumers.

To address the question, simply put the Fed does not have to raise rates to make the dollar stronger. Other countries lowering rates makes our currency stronger compared to theirs.

And, as far as rallying the OSM with rate cut like what happened to the USM. IMO, the cat is out of the bag now with the sub-prime mess. The earnings have told the tale. We are stacking up bank take overs and bank failures.

ECB lowers rates and that lowers the strength of the Euro against all world currencies. A weak Euro or strong Dollar negatively effects the I fund and any rate cut will not be felt instantaneously by their economy. There will be a lag just like with our market.

Now, if the ECB lowers rates and the US raises rates you have a double effect felt on the currency market. This is why the Dollar sank so fast because as we were lowing our rates while the ECB and BOE were rising their rates. Double whammy!

IMO, the economy has not made the turn yet even though we had a bear market rally we are still in a bear market and may make new lows. Everything we do in this country is based on credit. Leveraged buy out of companies, borrowed operating capital, auto loans, home loans, student loans, entrepreneurial loans, small business loans, agricultural loans, credit cards, etc. We have to have credit to operate in this economy. We don't have the pool of credit anymore because the bank have all their remaining capital tied up in balance sheets and now they are being forced to buy back the action rate securities, ARCs, that they froze because...............they are short of capital.

Sorry this turned into a long answer.

 

[luv2read]

Long answer but a good one! Thanks, just what I needed to help make sense of the currency "balance" cause and effect on the I fund.

 

[Show-me]

Rick is on CNBC. He sez, Fed is worried about inflation in comments today and the dollar is having a outside day, higher high and lower low than yesterday. This is a trend reversal signal.

Also, Erin was worried that the Fed is a two headed turtle. One fighting inflation and one fighting for the economy. She's worried one will get drowned. lol

 

[Show-me]

Long answer but a good one! Thanks, just what I needed to help make sense of the currency "balance" cause and effect on the I fund.

Even more simple is there are two things that effect the I fund. Currency effect and OSM direction.

 

[Show-me]

Quote of the day: This is not your mothers bear market.

 

[luv2read]

Even more simple is there are two things that effect the I fund. Currency effect and OSM direction.

Yes, I knew that. My question was how an ECB rate cut would affect them and if one would offset the other. Your answer helped clarify things. Thanks!

Also, Erin was worried that the Fed is a two headed turtle. One fighting inflation and one fighting for the economy. She's worried one will get drowned. lol

One should just go back in its shell. Get inflation under control and the economy will take care of itself. The true inflation rate is more like 11%, not the artificial 5.6% the government widgets.

 

[Birchtree]

The ECB will start cutting rates soon and that will help their economies as well as their stock markets. They don't have the problems we have with sub-prime liar loans and have survived rather well with their increase in rates - now they will rebound when lower rates arrive. I'm sticking with my 30% position in the I fund - everything just takes time. The I fund has already discounted higher rates and slower growth and will rebound.

 

[Guest2]

Quote of the day: This is not your mothers bear market.

I heard that too, Show ! Definately a "Quote Of The Day" !

 

[Show-me]

Still holding SLV and will for a while. The supply shortage is very intriguing to me and shows that people are hording physical metal. We did not have the kind of access we have now to precious metals due to the internet. You had to buy from a bank or dealer before now you can buy direct from the supplier or eBay. Margins are tighter because you can get real time spot pricing. I always like owning physical metal and wished I bought $20,000 in gold when it was $250/oz.

Oscar sez down on the Omni.