December 13, 2009

What happens to the yen

We are hearing more and more this currently relentless drumbeat from Japan that a strong yen is very problematic. This was a headline from today's bloomberg however it is a bit confusing to me. If they want their currency to weaken why limit how much is being put out on the market? Will have to wait and see how this materializes.

Fujii Says Japan Must Cap Bond Sales as Hatoyama Backpedals

Dec. 11 (Bloomberg) -- Japanese Finance Minister Hirohisa Fujii said the government must cap bond sales at 44 trillion yen ($495 billion) next year, in contrast with Prime Minister Yukio Hatoyama, who indicated he is prepared to abandon the pledge.

December 12, 2009

Be careful what you wish for

I read this article this evening and am a bit floored that Sen. Reid would ok and or write such a letter. He doesn't strike me as being much in the know about currency and international trade. I would sure like to analyze what this would do to the value of the dollar. Thinking out loud if chinas currency were to appreciate in value it could happen in two ways: first they could pull currency off the market and destroy some of their currency. Or second they could flood the market with some dollars which they hold quite a bit of in their currency accounts, and buy less dollars going forward.
How is that good for us? We are running record deficits and need now more than ever for foreign countries to by our treasuries so that we can finance our deficits.



December 07, 2009

Scary Bank Info

Well just when you think it is safe to go back into the water.  I ran across an article this evening that is sad, unfortunate and ironic.  Apparently the banks that are having the toughest time paying back TARP funds are the small and regional banks (sad).  These banks have a great deal of exposure to commercial loans and real estate loans making them very susceptible to market pressures for some time and not allowing them to pay back borrowed TARP funds as quickly as the larger banks (unfortunate).  Apparently the big guys, Wells, BofA, JPMorgan, etc. are diversified enough and large enough that they have been able to write down loans, become profitable and are at the point where they would like to pay back the TARP funds so they can get back to business as usual without all of the government bureaucracy involved with taking TARP monies.

Here is the rub, it is now the smaller banks that pose the greatest risk to the struggling economy.  So we can go back in history and say that the large banks were the ones, through over-leveraged derivative trading and bad home loans, that brought about the Great Recession but because of Government influence power and graft they are able to whether the storm but the small banks that had commercial loans and real estate loans but much smaller balance sheets are the ones that are going to have greater problems and will be the ones that will hamper an overall recovery.

Be careful of options

I used to trade options a lot. I learned they can be quite tricky and you have to be astute and quick to trade. I also feel now that they are definitely a better insurance policy than trading vehicle for me. That said this recent article:

"Options Signal Stock Peril as Analysts See Profits"

Was an interesting read. Option purchasing are putting a decline of the market at an 80% liklihood over the course of the next year. Not so you say we have all of this economic data that is good pointing to positive returns. A job market that seems to be stabilizing and turning a corner. My answer in reply is simply "debt". You can't out bs debt, there is not enough lipstick to put on that pig. Sooner or later it catches you and you have to pay up. We will wait and see.

My gold issue

There was a great article this morning in bloomberg news about gold. I have always struggled with gold as an investment. For those that simply want to hold it as a long term asset, much like a home, I think it is great but it is not an investment of choice for me.

Dec. 7 (Bloomberg) -- Gold’s best year in three decades has yet to match the returns of an interest-bearing checking account for anyone who bought the most malleable of metals coveted for at least 5,000 years during the last peak in January, 1980.

Investors who paid $850 an ounce back then earned 44 percent as gold reached a record $1,226.56 on Dec. 3 in London. The Standard & Poor’s 500 stock index produced a 22-fold return with dividends reinvested, Treasuries rose 11-fold and cash in the average U.S. checking account rose at least 92 percent. On an inflation-adjusted basis, gold investors are still 79 percent away from getting their money back.

“You give up a lot of return for the privilege of sleeping well at night,” said James Paulsen, who oversees about $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. “If the world falls into an abyss, gold could be a store of value. There is some merit in that, but you can end up holding too much gold waiting for the world to end. From my experience, the world has not ended yet.”

December 05, 2009

Firing it up

It has been a while and I have been busy, but I'm getting that feeling to rev back up the engines and start currency trading again. I've been inactive for about a year, but my concern about banks folding has subsided and with that being out of the way it is time to get back in the market. More to come.

Elon Musk: Tesla Cybertruck Is Dead, $20,000 City Car Is Coming

I think Elon Musk is interesting, humble and arrogant all at the same time. I'm glad he is him. Neat guy.  Elon Musk: Tesla Cybertruck I...