The Fed as expected lower the Fed funds and discount rates both by 25bp today. This was widely expected. There were two members who were against the move. These two members wanted no change. This, to me, is the direction the Fed is going. No more rate cuts. If credit tightens more, I believe they will take steps to provide funding, similar to what they did a few weeks ago when providing funds via the discount window to Investment houses. Inflation is a major concern,not only in the States but worldwide. I believe that the next move in rates will be up, and not that far in the future (6mth or so). Inflation can not and will not be allowed to get out of control.
Today S&P raised Brazil to investment grade. This is a very big deal and one that has been expected for a while. Being investment grade allows funds to purchase Brazilian debt and place it in their portfolio’s. This will lead to ALOT more purchasing of Brazilian debt going forward. This reminds me a lot of the Asian crisis a few years ago. Every time a country was taken off investment grade forced selling of debt and securities ensued. Now a similar situation will happen in reverse. I would assume at a slower pace but still occur.
Good luck and Good Forex Trading
And it can’t happen to soon for me. This month has been a struggle. The basic premise for all me trades has been wrong. I have had very limited conviction, and therefore no profits. Today looks like more of the same. Part of my problem is that since I have limited ideas I have been reaching out to friends for their ideas…..This is always a bad mistake. Someone elses ideas with little conviction equals LOSSES.
The good news is that I am above ground.
Good luck and Good Forex Trading
Dollar futures have been on a steady decline as has the Euro the last few sessions. I think this is in response to an expected pause in Fed policy after next weeks meeting. As readers know I have been calling for a pause, but now few that we will get a 25bp cut on Wednesday followed by a statement highlighting inflation and basically letting the market know that there are no more interest rate cut’s in the near term future. I think this is very smart as inflation is a big problem. Forget what is being reported, look at the essential things that you use everyday.
Gas, yesterday I filled up my 2004 Ford Sport Trec, cost $80.
Breakfast, $3.50 for an egg white sandwich (trying to watch my cholesterol) and $1.50 for coffee (street cart not a designer brand)
Lunch, $9.25 for a salad and a bag of chips (there goes the cholesterol).
The cost of day to day essentials is going up in a big way. This is money right out of your pocket and although the Fed will not admit it, they see the effect’s and will try to address it. Crude is the key. They need to find a way to get the price down. Holding rates steady will not do it, but a dampening of demand will. From the States and overseas (specifically India and China). I think after the Olympics China’s demand will lesson (no more window dressing) and India is having some issues with food prices and shortages. I am looking for a global slowdown in the weeks ahead, with rates moving higher (I know this makes no sense) to combat inflation pressures.
Good Luck and Good Forex Trading.
I am beginning to wonder why the administration is not jumping on opportunities to get the dollar higher and in turn drive crude oil lower. Today is an example. Crude is showing weakness, currently at 115.64 dollars per barrel. When Paulson comes out with statements like
Strong dollar in U.S. interest, G7 forex language speaks for itself.
U.S. economy in a rough path but fundamentals strong and will be reflected in dollar value.
Paulson declines to comment on whether dollar has overshot to downside.
It seems that the market gave him an opportunity today to at least start the reversal of the Dollar. Why not come out with a strong statement saying that the dollar HAS overshot. Of course maybe he doesn’t believe this but I think that the Fed (and as an extension the Administration) is in a very difficult situation. Inflation is high, very high. The Economy is very weak. In Egypt and India there are riots in the streets over Food. Here in the states Costco is limiting purchases of rice to it’s customers. Vietnam and India, two of the world largest rice exporters have placed temporary bans on some rice exports due to soaring inflation and poor harvests in the region. This according to an article in todays WSJ.
All in all a scary situation and one that I think the administration could make better by being more aggressive. Rate’s really need to be higher. Inflation, which is much higher then reported through CPI, is a killer. Gas is at $3.70 per gallon. Wait till it gets to $6.00 , and it will if crude is left unchecked, the economy will collapse.
I am not wishing this happens, and would be quite happy to be wrong.
Good Luck and Good Forex Trading.
This week my youngest son began his first paying job. Being an advit baseball fan he decided that he wanted to umpire Little league games. This is the first year that he is eligible to do this as he just turned 13 and now plays on the big field. He went to the Little League office and received some instruction and was also given a ball’s and strike counter, similar to the one in the picture. Being the good Dad that I am, I showed up at his first game to give him some support. Being only 13 they always pair up the kid’s with a “professional” umpire. The umpiring crews do a very good job in my town. With this pairing, the kid’s cover first and second base, while the Head umpire call’s, ball’s, strike’s and foul balls. No coaches are allowed to argue a call (you would be surprised how many do !) and for the most part this rule is followed. The Jr umpire is expected to keep track of ball’s and strikes in case the Head umpire losses track or a coach asks for the count. That is why my son was given the counter. He showed it to me and mentioned that the knobs were a bit stiff. I agreed but stated that they worked well enough.
He did a great job at his first game, called every play correct and even had a very close call at the end of the game which he made a clear, strong and correct call. I was very proud. After the game he came over to the house and told me about how everything went. After he was done he again stated that the counter was a little stiff, this time adding that he thought it would be best if he bought a new one (can you see where this one is headed?). Well I agreed, I told him now that he earned $20 dollars for the game, if he wanted to spend part of his earnings on a new counter to make his job easier “I fully encourage you to do it”.
His reaction was “You mean I have to pay for it myself”?
So let’s get this straight I said , you want me to buy you a new counter when the other one works just fine so that you can do your job easier. You earn money, if you want a new counter pay for it yourself.
So far no new counter has been purchased. You have to give him credit for trying, and I must admit I was laughing on the inside. I expect him to continue with his umpiring duties, whether a new counter will be purchased or not I am not sure, but I will keep you posted.
Next Page »
