Bulls, Bears & Bucks #48: Fed verlaagt rente met 50 bp naar 1 pct

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Op maandag 27 oktober 2008 20:51 schreef RvLaak het volgende:

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Iemand enig idee wat dat voor de inflatie gaat betekenen?

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Op maandag 27 oktober 2008 22:09 schreef PietjePuk007 het volgende:
190% kans , welke wiskundeleraar is daar verantwoordelijk voor?

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U.S. Dollar Currency Collapse Within 30 Days
Currencies / US Dollar Oct 24, 2008 - 10:41 AM

Currencies

Best Financial Markets Analysis ArticleIt appears that there is a common refrain going around the investment community. It goes something like this:

"Gold should be doing better, and, since it isn't, I am not going to buy it"

Investors who believe this are making the mistake of thinking COMEX gold is the same as real physical gold. It is not.

COMEX gold is a form of debt. It involves one party promising to produce gold (money) to another at a future date. Like all forms of debt, a COMEX futures contract is only as good as the counterparty behind the contract. Right now, because of low margin requirements, sellers of gold futures only have enough gold to cover 10% of outstanding contracts stored in COMEX warehouses. Considering that the biggest sellers of gold futures contract are insolvent financial institutions, it is obvious that COMEX gold has enormous counterparty risks . If even a quarter of outstanding contracts asked for physical delivery, it would be enough to guarantee a default. Since a financial collapse would actually creates the risk total default (insolvent banks can't produce the gold or cash), COMEX gold fails miserably as a safe haven . This is why COMEX gold prices are falling, while physical gold is disappearing from the market place

Because of scarcity, physical gold is selling at an enormous premium to gold spot price (which is set by COMEX). How big a premium? Well, on eBay 2008 gold buffalo are trading between 300 to 400 over spot price. That is a 50% premium. The enormous premiums being paid in the physical market means that a large number of December gold contract holders are likely to request delivery. A volume, whether it causes defaults or not, is likely to change the marketplace perception of gold and cause a rush of into a physical gold plagued by shortages. Gold will skyrocket over 2000 in a matter of days.

I am not the only person who believes COMEX gold futures are on the verge of collapse. I urge you to watch this video (skip to 11 minute mark) and read the extract below to see what others are saying about paper gold.


Video

( red emphasis mine)

Why Gold Is Dropping When It Shouldn't
by Alex Wallenwein

- and what it all means

Why is gold dropping right now when anyone in their sane mind would expect it to rise? The simple answer to this question is, " because Comex-gold isn't gold " - and because it deceptively pretends to be 'the' price-setter for real gold.

Gold is gold, paper is paper, and "Comex gold" is nothing but paper masquerading as gold while simultaneously pretending to be the price-setting medium for actual gold in the world. Now, finally, Comex-gold is in the process of being unmasked.

The real supply and demand determinants for Comex gold are not actual gold investors but fund managers . Fund managers are inextricably intertwined with the world of contract-based credit instruments. They use bet on Comex gold contracts to hedge their other (currently horrendously losing) bets with something they all, in their in-bred belief in paper markets, believe will 'go up' in value while everything else is going down.

However, these very same fund managers and their paper-bound investment psychology are the exclusive reason why Comex gold is dropping in these times when everyone (including fund managers) expects gold to rise. As already stated, though, and as they now finally realize to their own dismay, Comex-gold just isn't gold - and that causes even further selling.

Two Losing Bets, Compounded

Fund managers' other bets are losing money fast, now, so they need to raise cash to keep up the overall value of their respective funds, so they can earn their management bonuses and avoid getting booted for lack of relative performance. Guess what they cash in on? The very same Comex paper-gold they mistakenly bought as a 'hedge', of course.

Meanwhile, real investors in real gold are enjoying their shopping spree - except that the spree turned into a treasure hunt as the shelves and display cases of gold dealers look more and more like the supermarket shelves in the old Soviet Union - bare .

This is the only 'bare-market' in real gold the world will see for a long, long time to come.

With this split, this disconnect, between Comex illusion and gold reality, one thing or the other will have to give, and it won't be physical gold that gives.

My reaction: I am certain the US is less than a month away from a currency collapse. The fed and treasury are not even taking the time to think at this point: they are just throwing money and guarantees at each new problem that pops up without worrying about the consequence. Since no one can imagine a currency collapse, there isn't the political will to take the painful steps needed to prevent it (reign in fed and let institutions fail). The forces and trends behind the financial collapse are too powerful to stop.

If you have wealth and don't own gold, then you will soon be poor.

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IMF may need to "print money" as crisis spreads

The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.


IMF's work in countries such as Turkey is only just beginning

The Fund is already close to committing a quarter of its $200bn (£130bn) reserve chest, with a loans to Iceland ($2bn), Ukraine ($16.5bn), and talks underway with Pakistan ($14.5bn), Hungary ($10bn), as well as Belarus and Serbia.

Neil Schering, emerging market strategist at Capital Economics, said the IMF's work in the great arc of countries from the Baltic states to Turkey is only just beginning.

"When you tot up the countries across the region with external funding needs, you get to $500bn or $600bn very quickly, and that blows the IMF out of the water. The Fund may soon have to start calling on the West for additional funds," he said.

Brad Setser, an expert on capital flows at the Council for Foreign Relations, said Russia, Mexico, Brazil and India have together spent $75bn of their reserves defending their currencies this month, and South Korea is grappling with a serious banking crisis.

"Right now the IMF is too small to meet the foreign currency liquidity needs of the larger emerging economies. We're in a dangerous situation and there is the risk of extreme moves in the markets, as we have seen with the Brazilian real. I hope policy-makers understand how serious this is," he said.

The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA' bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.

The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world's central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.

"The IMF can in theory create liquidity like a central bank," said an informed source. "There are a lot of ideas kicking around."

For now, Eastern Europe is the epicentre of the crisis. Lars Christensen, a strategist at Danske Bank, said the lighting speed and size of Ukraine's bail-out suggest the IMF is worried about the geo-strategic risk in the Black Sea region, as well as the imminent risk a financial pandemic. "The IMF clearly fears a domino effect in Eastern Europe where a collapse in one country automatically leads to a collapse in another," he said.

Mr Christensen said investor sentiment towards the region has reached the point of revulsion. The Budapest bourse plunged 10pc yesterday despite the proximity of an IMF deal Meanwhile, Standard & Poor's issued a blitz of fresh warnings, downgrading Romania's debt to junk status, and axing the ratings Poland, Latvia, Lithuania, and Croatia.

The agency said Romania was "vulnerable to a sudden-stop scenario where capital inflows dry up or even reverese", leaving the country unable to cover a current account deficit of 14pc of GDP.

Romania's central bank has taken drastic steps to defend the leu, squeezing liquidity so violently that overnight rates shot up to 900pc. But there are growing doubts whether this sort of shock therapy can obscure the fact that economic booms are now turning to bust across the region.

Merrill Lynch has advised to clients to take "short" positions against the leu. "The fundamental picture suggests that Romania may face a currency crisis in the near term, similar to what Hungary has gone through over the last week," it said. The bank also warned that Turkey and the Philippines are vulnerable.

Hungary was forced to raise interest rates last week by 3 percentage points to 11.5pc to defend its currency peg in Europe's Exchange Rate Mechanism. Even Denmark has had to tighten by a half point, raising fears that every country on the fringes of the eurozone will have resort to a deflationary squeeze.

The root problem is that Eastern Europe and Russia have together borrowed $1,600bn from foreign banks in euros and dollars to fund their catch-up growth spurt over the last five years, according to data from the Bank for International Settlements. These loans are now coming due at an alarming pace. Even rock-solid companies are having trouble rolling over debts.

Mr Schering said Turkey was likely to join the queue for bail-outs very soon. "Their external liabilities have reached $186bn, and a lot of this is short-term debt that has to be rolled over in coming months," he said.

Turkey's prime minister Recep Tayyip Erdogan said over the weekend that his country would not "darken its future by bowing to the wishes of the IMF", but it is unclear how long Ankara can maintain its defiant stand as capital flight drains reserves.

Pakistan - now facing imminent bankruptcy - has also raised political hackles, balking at IMF demands for deep cuts in military spending as a condition for a standby loan. Diplomats say it is unlikely that the West will let the nuclear-armed Islamic state slip into chaos.

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Op maandag 27 oktober 2008 23:58 schreef Drugshond het volgende:
Deze is ook wel eens langsgekomen...
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The commodities report

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In het Verre Oosten is het vooral Indonesië dat voorlopig een plus noteert van 8 procent bij de ANVR-reisbureaus.

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# 190% kans op een verlaging van de rente met 25 basispunten tot 1,25%
# 95% kans op een verlaging van de rente met 50 basispunten tot 1%

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Oct. 28 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke and his colleagues usually sit down for their interest- rate meetings with a clear idea of what investors think they'll do. Not this time.

One key indicator, futures contracts, no longer provides an accurate signal of where the Fed will set its benchmark interest-rate target. The problem: Traders look at the rates banks charge each other for overnight loans when figuring out their bets on what the Fed will do, and for the last six weeks the Fed has failed to get those overnight rates to line up with its target.

The disconnect means Fed policy makers will find it harder to gauge whether markets will stabilize after the interest-rate decision they make at a two-day meeting starting today. Futures trading suggests a one-in-three chance that Fed policy makers will cut the target by three-quarters of a percentage point, to 0.75 percent. By contrast, only one of 64 economists in a Bloomberg survey foresees that outcome.

Bernanke and his colleagues are ``going to be less confident about the response to their policy action because they don't know what is already priced into markets, and investors are skittish,'' said Vincent Reinhart, a former Fed monetary- affairs director and now resident scholar at the American Enterprise Institute in Washington. ``It just adds another bit of uncertainty.''

Decision Tomorrow

The Federal Open Market Committee will announce its interest-rate decision tomorrow in Washington at about 2:15 p.m. New York time. Of the 64 economists surveyed by Bloomberg News, 35 forecast a half-point reduction from the current 1.5 percent rate, 17 economists expect a quarter-point cut, and 11 predict no change.

Rates are also on the way down in Europe. Jean-Claude Trichet, president of the European Central Bank, said yesterday he may cut borrowing costs at his next meeting on Nov. 6. The Fed, ECB and other central banks pared rates in a coordinated move on Oct. 8.

The misalignment of signals from the futures market is a casualty of the credit crisis: Fed programs pumping more than $1 trillion into the financial system to revive lending have thrown monetary policy off kilter.

The price of federal funds futures is ``irrelevant at this point'' as a signal for probable central bank rate policy, said Alexander Manzara, a broker in Chicago with TJM Institutional Services who has traded the futures for more than 10 years.

Trading in federal funds futures began 20 years ago on the Chicago Board of Trade, which is now part of CME Group Inc. Bloomberg LP's financial-information service provides data on the probabilities of various FOMC moves based on futures and options.

Extolled Futures

Bernanke, 54, extolled the value of the futures when he was a Fed governor in 2004 in research showing the stock market's reaction to FOMC decisions. The paper cited futures data in measuring how much policy changes between 1989 and 2002 surprised investors.

Federal funds futures are a ``convenient, market-based way to identify unexpected funds rate changes,'' said Bernanke's paper, co-written by former Fed economist Kenneth Kuttner.

``If we wanted to do the same thing today, we would not be able to use it,'' Kuttner, a professor at Williams College in Williamstown, Massachusetts, said in an interview yesterday.

Using futures to predict reaction to moves in the central bank's target rate is ``pretty much out the window at this point,'' he said, leaving only outside Fed watchers, trading on betting sites and a few other possible sources.

Robin Ross, CME's managing director of interest-rate products, said the futures are based on the federal funds market rate, and were never ``meant to be anything else.''

`Effective Tool'

At the same time, ``I still think it's a fairly effective tool'' for predicting FOMC decisions, and the contracts do foretell a half-point cut tomorrow as the most likely outcome, Ross said. ``It's not going to be exact and certainly is going to vary from what the target rate is,'' she said, adding that the futures also allow banks to hedge their cost of funds.

What's throwing the futures markets off now is the expansion of Fed lending, which has flooded markets with excess cash and made it difficult to control the overnight lending rate between banks. The Fed's outstanding cash loans to banks and other financial institutions totaled about $700 billion last week, compared with almost nothing a year ago.

The extra funds have expanded the supply of bank reserves, thwarting efforts by the New York Fed to keep the overnight lending rate from falling below the target rate since Lehman Brothers Holdings Inc. filed for bankruptcy Sept. 15.

Rate Gap

The gap between the Fed's target rate and the effective rate, or average daily market rate, was less than 0.01 percentage point in 2008 through Sept. 12. Since then, the spread has averaged 0.39 percentage point.

``They have made so many different facilities available to get funds that it is distorting the actual fed effective rate,'', said Lou Brien, a strategist at Chicago-based DRW Trading Group, who has 25 years of experience in markets.

Even an Oct. 6 decision by the Fed to pay interest on excess cash reserves deposited with it by banks has failed to put a floor under the overnight rate. The Fed increased the rate it pays on reserves by 0.40 percentage point last week to move the benchmark rate more in step with the target rate.

Before gaining the authority to pay interest, the central bank kept the federal funds rate close to the target by buying and selling Treasuries on the open market, adding or withdrawing funds from the banking system.

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Veel consumenten, bedrijven en investeerders overal ter wereld, hebben de afgelopen jaren leningen in yen (en in mindere mate in dollar) afgesloten. De rente hierop was veel lager dan de rente in het thuisland. Nu de koers van de yen steil omhoog gaat, explodeert de waarde van deze schulden.

Japanners op hun beurt zetten hun spaargeld de laatste jaren liever op een rekening in het buitenland, om de lage rente in hun eigen land te ontvluchten. De waarde van deze overzeese bezittingen (gerekend in yen) zijgt nu juist ineen en bovendien wordt de Japanse export bedreigd, nu Japanse producten relatief duur worden.

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Op dinsdag 28 oktober 2008 10:35 schreef Roel_Jewel het volgende:
Ook een belangrijke graadmeter:
ABU: NL uitzendvolume -8%, uitzendomzet -6% periode 10 2008

Goedkoopste uitzendkrachten worden dus als eerste eruit gegooid...

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Op dinsdag 28 oktober 2008 11:37 schreef rvlaak_werk het volgende:
Crosspost:
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Geeft aan dat er nu daadwerkelijk meer en meer "echte" bedrijven de problemen merken. Wat zijn jullie voorspellingen voor de korte- en middellange termijn?

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Op dinsdag 28 oktober 2008 11:37 schreef rvlaak_werk het volgende:
Geeft aan dat er nu daadwerkelijk meer en meer "echte" bedrijven de problemen merken. Wat zijn jullie voorspellingen voor de korte- en middellange termijn?

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Op dinsdag 28 oktober 2008 11:31 schreef SeLang het volgende:

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Dus iedereen gepwned

Dit is weer eens een bevestiging van de observatie dat uiteindelijk de markt altijd de meerderheid van de participanten frustreert en een kleine (slimmere) minderheid profiteert.

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Op dinsdag 28 oktober 2008 12:05 schreef SjonLok het volgende:
Ik wil mijn pessimisme nog wel even ondersteunen met een lijstje:

Dit is een lijst van sectoren die reeds getroffen zijn door de crisis:
Bankwezen Hier begon het allemaal mee
Autoindustrie Kijk maar naar het aantal fabrikanten dat hun productie stil legt.
Bouwbedrijven Krijgen geen financiering meer voor het starten van grote projecten.
Uitzendbranche Uitzendkrachten gaan er altijd als eerste uit
Electronica Sony rapporteert slechte verwachtingen. Op luxe goederen wordt als eerste bezuinigt.
Vakanties Het aantal boekingen van skivakanties blijft sterk achter

Uiteindelijk komt de crisis steeds dichter bij de consument. Kijk maar naar de twee laatste punten op de lijst. Dit gaan we echt nog hard merken in 2009.

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Op dinsdag 28 oktober 2008 12:11 schreef superworm het volgende:
SjonLok, je vergeet de transportsector.

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Als de malaise in Engeland en ook Ierland niet verandert, zullen door overcapaciteit veerdiensten op de Noordzee verdwijnen. Ook ik zal mogelijk begin 2009 vaarschema’s aanpassen of op de lijnen van Rotterdam Europoort naar Harwich het aantal schepen van drie naar twee terugbrengen. Ik hoop dat het niet nodig is. Het hangt ook af van komende tariefbesprekingen met transporteurs. Die moeten tot betere inkomsten leiden.

De Lange hoopt dat de economie van Engeland zich heeft hersteld als Stena in 2010 en 2011 vier nieuwe vracht- en passagiersveerboten in de vaart brengt op de in totaal zeven lijndiensten met Harwich en Killingholme. „Engeland moet ooit weer gaan importeren, ook omdat er weinig wordt geproduceerd. Ook de Olympische Spelen zullen een impuls geven,’’ veronderstelt hij.

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Op dinsdag 28 oktober 2008 12:09 schreef rvlaak_werk het volgende:

En hoe verwacht je dat dit lijstje verder gaat?

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Op dinsdag 28 oktober 2008 13:11 schreef SjonLok het volgende:

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Ik weet niet over er nog veel sectoren overzijn. De consument zit volgens mij aan het eind van de ketting. Dat betekent dat de consument de crisis als laatste merkt, maar dat betekent niet dat er nu een eind aan de crisis is gekomen. Voor de gewone burger begint het nu pas echt.

Dus, er worden geen dure tv's meer gekocht. Men ziet af van de wintersportvakantie. Mensen gaan boodschappen doen bij Lidl i.p.v. een duurdere supermarkt en ga zo maar door.
De werkloosheid zal flink stijgen de komende tijd.

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Op dinsdag 28 oktober 2008 12:45 schreef simmu het volgende:
afgaande op de grote jongens (die grote transporttankers) zijn we binnenkort gewoon goed en grondig *de lul*

ik blijf staan bij de d's van depressie en deflatie.

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The Baltic Dry Index is an index covering dry bulk shipping rates and managed by the Baltic Exchange in London. According to Baltic Exchange, the index provides:

“ …an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain.

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For the past few weeks Andy and I have been reporting in our respective dailies on the difficulties being faced by importers and exporters of basic materials in getting access to bank finance to fund trades. For example, Andy wrote about South Korea's request for immediate aid support from the US to fund food and fuel imports, I discussed how the lack of trade finance was reducing the volume of coal shipments into Rotterdam and was affecting the volume of US grain exports. When you come to think about it, if banks are reluctant to lend to each other because of perceived counter-party risk, why are they going to lend to a small trader from Asia, Africa or even Europe. We know of banks that have rejected letters of credit from other banks - and we are aware of banks that have simply refused to pay out on letters of credit because they claimed they did not have access to the funds. Without a working trade finance system the global market is going to break down……….eventually.

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Op dinsdag 28 oktober 2008 13:12 schreef rvlaak_werk het volgende:

En wat zie jij als "de komende tijd"? Is dat een periode van weken/maanden/jaren?

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Op dinsdag 28 oktober 2008 13:22 schreef SjonLok het volgende:

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Heel 2009

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Op dinsdag 28 oktober 2008 13:26 schreef simmu het volgende:

dat vind ik nog erg optimistisch hoor

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Op dinsdag 28 oktober 2008 13:26 schreef simmu het volgende:

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dat vind ik nog erg optimistisch hoor

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Op dinsdag 28 oktober 2008 13:53 schreef simmu het volgende:
zelfs als d pijn beperkt wordt tot een recessie ben je daar niet in een jaar vanaf. maar: de wereld vergaat niet van een recessie, zelfs niet van een depressie

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Op dinsdag 28 oktober 2008 13:58 schreef simmu het volgende:
zo 1-2-3 volgens google: http://www.rtl.nl/(/finan(...)rocent_kripm_cbs.xml

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Op dinsdag 28 oktober 2008 14:02 schreef rvlaak_werk het volgende:

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dank. Had idd ook zelf wel ff kunnen zoeken

Maar dat artikel geeft al aan dat een recessie heel goed binnen een jaar over kan zijn.

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Op dinsdag 28 oktober 2008 14:14 schreef dvr het volgende:
Recessies zijn overigens best leuk hoor. Mensen krijgen weer aandacht voor elkaar, de jeugd wordt lekker opstandig en creatief, de politiek gaat weer ergens over, er ontstaan nieuwe ideeën en stromingen, etc.

Het moet alleen geen crisis worden. Ik woon weliswaar op fietsafstand van talloze boeren, maar die zijn de laatste jaren allemaal overgestapt van koeien, kool en aardappelen op de bollenteelt.

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Op dinsdag 28 oktober 2008 13:31 schreef SjonLok het volgende:

Voor veel mensen is het een ver-van-hun-bed show

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Op dinsdag 28 oktober 2008 13:11 schreef SjonLok het volgende:

Dus, er worden geen dure tv's meer gekocht. Men ziet af van de wintersportvakantie. Mensen gaan boodschappen doen bij Lidl i.p.v. een duurdere supermarkt en ga zo maar door.

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Op dinsdag 28 oktober 2008 14:32 schreef SeLang het volgende:
Wie luistert er dan ook naar adviezen van anderen
"Wie zelf geen mening heeft mag niet naar de beurs" zei ooit André Kostolany