US Dollar - Bullish or Bearish!
Printed From: The Equity Desk
Category: Economy, Markets and commodities
Forum Name: Global Economies - Where are they going?
Forum Discription: If India is shining.Is the Sun setting in the west?Discuss how India could be affected if global economies crack. In case that happens is there a safe haven for Indian Investors?
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=457
Printed Date: 03/May/2025 at 6:19am
Topic: US Dollar - Bullish or Bearish!
Posted By: BubbleVision
Subject: US Dollar - Bullish or Bearish!
Date Posted: 06/Oct/2006 at 7:37pm
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Has The Momment of truth for the US Dollar arrived ?
We saw an very very bad US NFP Number today Way below expectations and LOOK what happened.
The Euro got Sold Off and The YEN is now at a 5 Month lows...
For the $-Bears they HAVE TO contain it below the important levels mentioned below
$-Index is at 85.89 and the 100-Week MA is at 86.77. Above these we are really in $-Bullish waters......
The 100-Week MA for Euro-$ is at 1.2513. The $-Yen is now above 200-Month MA (117.56). The $-CHF is above its 100-Week MA of 1.2437 ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Replies:
Posted By: kulman
Date Posted: 06/Oct/2006 at 7:43pm
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BubbleVision
Please throw some light on "inverted yield curve" and its significance. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 06/Oct/2006 at 7:56pm
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Kulman Ok I will Tommorrow or sunday... I have researched that since 1962 in the last week and that is why there was so less posts from me recently.I am writing something about it which hopefully will be published in a Big US magazine.
Important Everyone: North Korea to test Nukes over the weekend according to Jap PM Abe. The US is closed on Monday. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: chic_1978
Date Posted: 06/Oct/2006 at 10:17pm
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Hi Bubble
Can you please explain the inpact on Euro in detail... ------------- happy & wise investing |
Posted By: BubbleVision
Date Posted: 06/Oct/2006 at 10:03am
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Chic - as the US dollar moves up the Euro will automatically lose its value and go down. If the 100-Week MA for the Euro is crossed, expect substantial selling in the Euro. I have a Long term Euro bearish stance on basis of TA as long as it trades below 1.3000.
I think that what matters to you more is the Euro-INR cross and how the euro performs against the Rupee. Am i correct... ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 07/Oct/2006 at 2:23pm
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What are Bonds and other factors… Bonds are debt instruments where the issuer of the bond pays a fixed or variable interest to the buyer of the bond. They are of two types firstly the Govt Bonds (backed by the Fed) and the second one being the private sector bonds. Every country has a bond market where the bonds are traded. The bonds are of various tenures right from 15 Day to 30 years. The bond prices are dependent on the outlook of the fiscal position of the country, inflation outlook, and interest rates outlook. Since various bonds are traded at a particular time, it is possible to have different yields on them. The general convention is that the longer the time frame for the bond, the higher the yield should be as there is greater uncertainty. However once in a while the yields on the shorter-term bond becomes MORE than the longer term bond and this is called Inversion Of the yield curve. The inversion can be on any yield curve.. 2-Year Bond – 10-Year Bond or the 15-Day Bond – 2-year Bond. Generally, the difference between the 15-Day and the 10-Year is looked as a reference for Yield Curve inversion, but I generally look at the Difference between the Fed Funds rate and 10-Year Yields. Why does the Curve invert? As discussed above the yield curve inverts when the short-term rates are ABOVE the long-term rates. The long-term rates are lower generally when the market expects the Fed to cut rates in the long term but NOT in the short term. This implies that the market believes the Economy will slow down in the future, causing the Fed to cut rates. This is why the Yield curve inversion is generally indicative of a future recession. The UK example… But as everything, nothing is sacrosanct and this can also trick people. We have seen in the recent past that the UK yield Curves are inverted since 2004 and the economy has NOT fallen into a recession (so far). Infact so much so that they have re-started to raise rates now after a one-year gap. In the process the “Housing Bubble” of the UK has also cooled and elusive the “Soft-Landing” has been achieved. This UK example has been the most overlooked part in the recent past by most of the Economists and those who ignore history are most prone to repeating the same mistakes. As always BubbleVision’s antenna UP. History of past Inversions in the US (significant ones), and their impact on Dow….
Note that US has been used as an indicative example and this is applicable to every country. Hopefully kulman I have been able to answer you. Comments and Questions from everyone….. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: prosperity
Date Posted: 07/Oct/2006 at 2:45pm
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1) Basic Question -
Assume that today dollar is available at 46 rupees.
Now if dollar appreciates Vs. rupee does it mean
a) Dollar would be available at 50 rupees OR
b) Dollar would be available at 40 rupees...
I have large exposure to shares of my US company hence have large dollar assets.... so after some 8-10 years when i sell my US company stock then i'll be selling the dollar and converting it into Rs.
So would the exchange rate of dollar Vs. rupee at that time is EXPECTED to me more than 46 i.e. Rs 50 or more
OR is it expected to be less than 46 i.e. Rs. 40 or less
THIS WOULD HELP ME DECIDE THE HOLDING PERIOD OF MY US COMPANY STOCK ALSO.
Thanx !!
------------- |
Posted By: monu_duggad
Date Posted: 07/Oct/2006 at 2:50pm
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Hey bubble .....nice analysis...
you put it very succintly...as an mba grad at iim i used to be scared of debt market studies and thats why i never took the optional subject..Fixed Income Markets...i used to get confused about...yield curves...inversion....and hazar other things....but surprisingly...after i left mba....i regularly read about bonds,bond markets etc.....
Tell me one thing...what does a flat yield curve signify ? and why is it that RBI always seems to follow whats happening in USA/UK in terms of interest rates etc.......is our bond market without any depth ? ------------- If you think you can,You Can |
Posted By: monu_duggad
Date Posted: 07/Oct/2006 at 2:56pm
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Prospertiy.......
Aprreciation of dollar means depreciation of rupee....that means rupee is weakening vis-a-vis dollar....so today if you are getting 1 dollar for 46 Rs tomorrow you will have to shell out 50 Rs....net net...to answer your query.if dollar appreciates,your 1 dollar will fetch you 50 Rs compared to 46 that it gets you today....
So if you have US stocks in your folio..pray that rupee slides ;-)...will not only benefit you,but also IT investors will laugh there way to banks !! ------------- If you think you can,You Can |
Posted By: prosperity
Date Posted: 07/Oct/2006 at 3:09pm
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Thanx Monu ...
So in your, BubbleVision and other senior members of this forum's views -
Would the dollar appreciate Vs. the Rupee ?
What is the answer of above question if the time period is
a) One year
b) Five years
c) Ten years
I would NOT hold anyone responsible for their answers, coz i am just looking for views and reasons/gut_feels behind those views ....
and you could say any of the answers
A) Dollar would appreciate Vs rupee
B) Dollar would depreciate Vs rupee
C) Can's say
Thanx ------------- |
Posted By: BubbleVision
Date Posted: 07/Oct/2006 at 3:21pm
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Prosperity, since our currency is Quoted as USD-INR, this means that Dollar appreciates, it goes to 50 and if the Dollar depreciates it goes to 40.
Since currencies are quoted relatively (against each other), The best way is look at this way... If the price goes up, the currency mentioned first has appreciated, and if the price goes down, the first mentioned currency has depreciated.
Monu - why pray... Prosperity would be losing relatively in US$ terms and as a result turn poor, when compared to their US counterparts for no aparent fault of his.
----------------
Tell me one thing...what does a flat yield curve signify ? and why is it that RBI always seems to follow whats happening in USA/UK in terms of interest rates etc.......is our bond market without any depth ?
--------------------------
A flat yield curve signifies that the existing rates are fine and that should continue. It is just like a stagnant stock price movement which everyone hates.
RBI now follows the US and NOT the UK. This is mainly because US is the Big Boss (currently). Only RBI does not follow them, but mostly all other major central banks too follow it.
Our bonds have little depth and there is a similar case with the whole of Asia. Atleast our bond market is better then the remaining ones in Asia-Ex Japan.
What really is required is a "Asian Bond Market", on lines of the European bond market where Bunds are traded. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: prosperity
Date Posted: 07/Oct/2006 at 3:26pm
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Monu - why pray... Prosperity would be losing relatively in US$ terms and as a result turn poor, when compared to their US counterparts for no aparent fault of his.
---------------
So do you mean to say there are more chances of Dollar depreciating Vs. the rupee ?
But i thought at the starting of this topic ... you were bearish on euro and hence bullish on dollar and hence dollar should appreciate vs. euro and hence dollar should appreciate vs. rupee also...
Have i understood this wrongly ?
Kindly help! ------------- |
Posted By: BubbleVision
Date Posted: 07/Oct/2006 at 3:30pm
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Prosperity i am Bullish on the Dollar (internationally). The USD-INR should move to towards 47.50 over a 1 year time frame, while it holds above 45 level. -------------
you were bearish on euro and hence bullish on dollar and hence dollar should appreciate vs. euro and hence dollar should appreciate vs. rupee also...
---------------
Prosperity, now you are starting to understand Crosses also... great ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: prosperity
Date Posted: 07/Oct/2006 at 3:36pm
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BubbleVision,
Thatz good news for me... I have huge exposure to my US company stocks...
Then why did you said that i'll become poor as compared to my US counterparts ?
"Monu - why pray... Prosperity would be losing relatively in US$ terms and as a result turn poor, when compared to their US counterparts for no aparent fault of his."
I'll try to explain... I am in India, working for a US MNC company.. and i have US stocks under stock options and purchase plans... so thatz how i have US assets while living/working in india...
So, if the dollar appreciates (according to your view) then i should become rich and not poor - Right ?
So, where is the confusion. pls. explain !
Thanx
------------- |
Posted By: BubbleVision
Date Posted: 07/Oct/2006 at 3:48pm
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Prosperity - whatever Dollar denominated assets you have, i think that the Rupee denominated assets would be more than that, hence net-net you will become poor (in US$ terms) incase the the dollar goes up. Incase your $-denominated assets are more than INR denominated assets, then $-Appreciation would be great news for you. Hope there is no confusion now. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: prosperity
Date Posted: 07/Oct/2006 at 3:55pm
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Thanx ... understood whatever you have said till now !
But, your last statement applies ONLY if i compare myself with my US counterparts ...
If i continue to live in India for my entire life ... then what is the need for comparision with US counterparts ?
Assuming dollar appreciates, my total networth would depreciate in US $ terms even if its the same in Rs. terms (coz i have more rupee assets than dollar assets)
But why should i care for that if i never would go outside India ????
Does it really effects me in any way ? and i am unaware of it ??????
And one more thing - if dollar depreciates for next 4-5 years, then FIIs can take money out of indian stock market which is a BAD news for Indian stocks ... coz they'll have liquidity pressures pulling them down ?
Thanx ------------- |
Posted By: BubbleVision
Date Posted: 07/Oct/2006 at 4:04pm
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But why should i care for that if i never would go outside India ????
Does it really effects me in any way ? and i am unaware of it ??????
And one more thing - if dollar depreciates for next 4-5 years, then FIIs can take money out of indian stock market which is a BAD news for Indian stocks ... coz they'll have liquidity pressures pulling them down ?
--------------------------------
No it does not effect you incase you live in India for your life.
FII and $-Rupee have a different relationship which i would not be able to explain just now. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: prosperity
Date Posted: 07/Oct/2006 at 4:07pm
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Thanx... and Sorry for the typo - what i meant was - appreciate in below sentence, but i wrongly wrote it as depreciate - Sorry ! And one more thing - if dollar appreciates for next 4-5 years, then FIIs can take money out of indian stock market which is a BAD news for Indian stocks ... coz they'll have liquidity pressures pulling them down ? ------------- |
Posted By: BubbleVision
Date Posted: 07/Oct/2006 at 4:10pm
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And one more thing - if dollar appreciates for next 4-5 years, then FIIs can take money out of indian stock market which is a BAD news for Indian stocks ... coz they'll have liquidity pressures pulling them down ?
------------------
FII and $-Rupee have a different relationship which i would not be able to explain just now. That should be for next week.
Pros, may i know which US company are you working for? ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 07/Oct/2006 at 12:27pm
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Thanks for the commentary on Yield Curve....
This is an interesting read, especially for GlobalVision...errr...BubbleVision:
http://www.project-syndicate.org/print_commentary/rogoff20/English - Where did market volatility go?
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 07/Oct/2006 at 11:37am
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Thanks Kulman... a very nice article, exactly what i like to read.... ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: chic_1978
Date Posted: 09/Oct/2006 at 9:13pm
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Yes Bubble
My concern is Euro performance against Rupee.
If you are bearish on Euro-$, will that affect Euro-Rupee ?? how ?
Will that make Euro weaker then Rupee ( ie less then 57/-)
Please explain
------------- happy & wise investing |
Posted By: BubbleVision
Date Posted: 10/Oct/2006 at 1:31pm
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Thanks Chic for confirming my suspection.
The EUR-INR rate is Calculated my Multiplying Euro-$ Rate with USD-INR Rate. Therefore the current rate is 1.2600*45.80 = 57.71.
I have been bearish on EUR-INR since it broke below 59.00 in Early Sept-06. It has been falling since then. The cross tracks the Euro performance against the Dollar since the Volatility in the USD-INR is low and hence there is a positive corelation between EUR-$ and EUR-INR. The 200-MA on the daily for EUR-INR is 56.64.
Now i expect the Euro to fall against the $ in the long term (2-Years) to 1.15...and if that is gone then towards 1.05 while it trades below 1.3000. At the same time The USD-INR could rally to around 47.50. So the EUR-INR could dip to around 1.15*47.50 = 54.50 odd levels. If Euro breaks 1.2500, on a weekly close basis, then my view will get real backing.
I am not sure how you will be able to hedge yourself against the fall unless you trade currencies (which i would recommend you against). So you can only ask your employer to pay you in $-Terms and NOT in Euro terms. This will solve your problem.
Hope my explanation is clear...
Do write back.
BubbleVision ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: chic_1978
Date Posted: 10/Oct/2006 at 2:13pm
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Tnx Bubble
That was a grt explaination
so now i better convert my Euros to $ for near future inorder to get more on rupees ?
------------- happy & wise investing |
Posted By: BubbleVision
Date Posted: 10/Oct/2006 at 7:29pm
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Exactly Chic... as i write the EUR-INR has fallen further.... ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 16/Oct/2006 at 7:41pm
Here is a chart of inverted yeild curve of the US which i had explained earlier
 ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: chic_1978
Date Posted: 17/Oct/2006 at 2:40pm
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Hi bubble
yeah i noticed that
wot do u thtink will be the next target 55 ?
wot do u feel abt crude ? i heard from some sources in middle east that it will come down to $45/-, is it possible in near future ?
------------- happy & wise investing |
Posted By: BubbleVision
Date Posted: 17/Oct/2006 at 3:03pm
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The EUR-INR stays in a downtrend while below 59.00. The cross has its 200-Day MA near 56.84 and it could trade near these levels for some more time (2-3 weeks), before it starts to slide once again in the earnest.
I would not like to give my Crude oil Views on the forum but "Boonie Pickens".. the man who made $1.5Bln last year (was the most profitable trader in the world) says we will touch $70.00 before $50.00. He is based in Dallas and runs a Hedge Fund. Take your own judgement. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: basant
Date Posted: 17/Oct/2006 at 4:34pm
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Just a casual thought but 1.58 billion looks big or rather huge any idea on how much this guy was managing. Rather if you could tell us his annual return in percentage that should be interesting. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: BubbleVision
Date Posted: 17/Oct/2006 at 5:08pm
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I have posted the Biggest traders for 2005 in a new page which is located at http://theequitydesk.com/forum/forum_posts.asp?TID=505&PID=4892#4892 - Link ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: manishdave
Date Posted: 17/Oct/2006 at 10:14am
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Bubblevision,
US is big importer of OIL. But even bigger exporter of dollar when oil prices are higher as it is called petrodollar. Their deficit go down, but demand for dollar also go down. So is lowre oil good or bad for dollar?
|
Posted By: BubbleVision
Date Posted: 18/Oct/2006 at 1:00pm
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Manish...
I am a Technical Analyst, so i look at the markets technically.
However according to me Lower Crude will lower the demand For dollar and hence the logic should be Lower Dollar. However we are missing a very important point here.. The demand for Dollar is not only for crude but also for investing in the US stocks and US bonds. So when we are looking at the demand for Dollar... we should be looking at all the components and not only Crude.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: Vivek Sukhani
Date Posted: 19/Oct/2006 at 3:40pm
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Hi Bubble Vision,
W.R.T. The chart on the previous page which you have posted showing the diff between long term yield minus short term yield, may I know does the difference indicate inflation expectation in the long term?
Hi Manish,
Bubble vision is correct.I am not too much into currency but then have ben listening to the view that dollar is structurally weak in the long term. The Tresury International Capital Investment data showed an inflow of more than 116 billion dollars, which is whopping given their trade deficit of nearly 69 billion US dollars. However, Manish I beleive a currency can no longer stay strong if it increases its external loan like this. Wehave to understand that foreigners are not spending in US thay are buying their assets.... and these assets have got to be redeemed.Its the Asian peers which are contributing to the bulk buying of US treasuries, and I beleive so long as real yield on dollar is positive compared to euro and yen and other important dollar pairs, the situation wont change. However, I have my own thoughts on future direction of the yield curve and I beleive sooner or later nominal interest rates will come down and if the inflation doesnt come down or remains constant instead, real yoeld has to fall. The inflation indicators like PPI are turning way too mild and I dont think the real yield can stay strong for long.
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Posted By: BubbleVision
Date Posted: 19/Oct/2006 at 5:00pm
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Vivek..the chart on the previous page shows an expectation of Recession and NOT inflation.
The TICs data of $116 Bln for the month of Sep was an unexpected number and one data point does NOT make a trend. The 6-Month MA of the Tics data is approx $56 Bln, which is below the Trade Balance of the US which is - 66 Bln monthly (6-Month MA) ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: Vivek Sukhani
Date Posted: 19/Oct/2006 at 5:41pm
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Hi Bubblevision, I wanted to know what is the difference between long term interest rate and short term interest rate indicate. It shows the expectation of inflation.Recession is characterised by low inflation and hence low nominal (short term) interest rates.Most times, sych a scenario is characterised by an inverted yield curve.Actually the slope of the ZCYC(Zero Coupon Yield Cirve) curve, meaning the first order derivative of the ZCYC curve shows the direction of the inflation with a lag.
But I must tell you that I aapreciate the chart's findings. As faras TIC goes, I dont look at movong averages of a data. But a jump from roughly 32 billion dollars to 116 billion dollars was indeed a matter of surprise.May be an aberration but nonetheless significant aberration.
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Posted By: BubbleVision
Date Posted: 19/Oct/2006 at 5:48pm
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The Tics may be revised next month... this 116.... is just a preliminary data. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: Vivek Sukhani
Date Posted: 19/Oct/2006 at 5:51pm
| Rather most of the time such a scenario is preced by an inverted yield curve.Diring the recession the invertedness gets corrected. Apologies for the mistake. |
Posted By: BubbleVision
Date Posted: 19/Oct/2006 at 5:55pm
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Vivek i have explained what that chart indicates on the first page of this thread. Recession may not always be characterised by Low inflation. The biggest example of this is 1974 and 1980 in the US....
For inflation you need to track Treasury Inflation-Protected Security (TIPS) BOND. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 23/Oct/2006 at 6:56pm
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Yeh aur ek Wicket gayaa.... http://www.marketwatch.com/news/story/Story.aspx?guid=%7BEB0C36FC%2D9FE1%2D4D44%2D96C0%2DB39376E47274%7D&siteid= - caught by Hedging Bowled by Derivatives!!!
Ford Motor Co. reported a wider third-quarter loss, reflecting difficulties in its operations and restructuring costs, and the auto giant also said it would restate earnings going back five years for derivatives accounting. Ford said it discovered that since 2001, certain interest-rate swaps Ford Motor Credit had entered to hedge the interest-rate risk inherent in certain long-term fixed rate debt were accounted for incorrectly.
Financial WMDs are at work....
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 29/Oct/2006 at 11:33am
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A Surprisingly sharp fall in the $ last week as the Dollar index continues its 6-Month old tennis match between 84.00 and 87.00 with all moves reverting to the Net (mean) at 85.5. Currently it is near the net.
Since the match is in its 6th set, i expect a conclusion to the match sooner rather than later. I expect the match to be won by Andy Riddick (US) RATHER then Roger Federer (Europe).
I hold this view while the DollarIndex is above 83.00 on a monthly close basis.
In the meanwhile here is an interesting http://www.bloomberg.com/apps/news?pid=20601109&sid=aaKYsXhDgBtw&refer=home - link on the performance of HedgeFunds (Incl Soros and Jones) ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 30/Oct/2006 at 10:20pm
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Great analogy to Tennis match, BubbleVision.....
By the way, do your advisory reports contain such interesting analogies? If so, and if it is not violating the norms, you may post copies of your reports here on this forum....
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 01/Nov/2006 at 2:15pm
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Kulman... Unfortunately, the daily comments which i write have no room on this forum. They are Intraday views and we change our views at the drop of a hat.... (0.50% MOVE)....On the recomms i give i get stopped out even if there is an adverse move of 0.15% or 0.20%....
The tennis matches in Currencies can last very very long... Look at the Aussie Dollar against the US Dollar... It has been in a 9% range since 2004.. that is 2.5 long years and the ONLY way to make money is to use leverage... Yes in currrencies some mungerilals use 400 times leverage and are wiped out in 30 Minutes.. Although the views which i have posted on the forum are Long term....
While i say that the Dollar may fall in the long term (5-7 Years), because of the structural probs in the US.. I think that there would be a big rally before that (1-2 years, Cyclical in nature). This rally (if it is seen) would really test the conviction and the Endurance of all the Dollar bears.
This is what the market always does and it could so that once again....
If the above sanerio pans out then the Dollar index could take this Route.... 85(current) - 100(2007) and then to 60(2009)... But i live in reality and i see the current trend on the weekly and Monthly charts as UP while 83.00 Holds on a monthly close basis.
A break below 80.00 (if seen) would open a new world... as 80.00 (Approx) has been a 20-Year low...
If the Dollar breaks down now (unexpected currently).. it could do the most against the Pound and the Euro as the Yen index itself is at a 20 year low....
Another thing which could pan out is that Dollar depriciates... but not against any currencies but against a basket of metals (the Gold bugs believe this)...If so we would see a rally in the commodities complex in all currencies.... ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 01/Nov/2006 at 6:45am
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Thanks BubbleVision, for your last post on this thread. It's interesting.
Leveraging @ 400 times seems quite a high reward-high risk game!
Does your organisation make money when your clients actually trade or is it kind of advisory/research service?
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 01/Nov/2006 at 9:21am
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Kulman... I dont recommend 400 Times leverage to anyone... I am saying that i have seen people do that and get wiped out. Normally 5-10 times is acceptable....
It is purely Advisory and our clients base is mostly based overseas.
However i know for a fact that my written daily reports goes to some of the biggest trading desks in the world, including those of what you termed as "Goldman Sucks" ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: basant
Date Posted: 01/Nov/2006 at 9:50am
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Golden words to Goldmen Sucks!!! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: BubbleVision
Date Posted: 01/Nov/2006 at 10:01am
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I dont know they are Golden words or not, but they certainly are words....which helps the brokers only as the spread on EUR-USD is normally 3 pips and Our TP's are 30-Pips... (SL being 15-20 pips) ....Mungerilals pay 20% of their Potential profits are Brokerage...No wonder the Forex brokerages are laughing all the way to their banks. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: basant
Date Posted: 01/Nov/2006 at 10:10am
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Mungerilals pay 20% of their Potential profits are Brokerage...No wonder the Forex brokerages are laughing all the way to their banks.
_______________________________________________________
Read again:
Firangilals pay 20% of their losses as brokerages. Is it not strange that Forex Brokerages are counting their dollars/Euros all the way to the Banks  ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: BubbleVision
Date Posted: 01/Nov/2006 at 10:17am
Well said .. compeletly agreed ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 01/Nov/2006 at 11:15am
|
The list is getting longer.....first it was Mungerilal, then Chunnilal, now Firangilal !!!!
Very soon I'll be travelling by train with lots of Mungerilals & families to a tourist place.
http://www.theequitydesk.com/forum/forum_posts.asp?TID=359 - Watch this space ......a new character named Musaddilal is also coming along......
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 03/Nov/2006 at 1:13pm
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Kulman - another tennis match is Euro-Yen. Its range (1.25%) since 28-Sep is between 150.80 on the higher side and 148.49 on the bottom. This was its smallest range in the last 30-years.
Tommorrow hopefully i would discuss what is Dollar Index and what is Yen index and how they are different from Eur-Usd and Usd-Yen.....
Any takers... or do you guys know the difference.... ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 03/Nov/2006 at 1:23pm
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You may continue posting about Dollar & Yen Indices as these are newer terms for me.
And who knows....with globalisation, liberalisation......capital account convertibilty.... these could be of help.
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 06/Nov/2006 at 2:44pm
|
Take That
http://www.turkishdailynews.com.tr/article.php?enewsid=58313 - Jim Rogers: Euro will disappear in 15-20 years ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 10/Nov/2006 at 1:09pm
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The Church bells are ringing and the Grave has been Dug. We can even see a casket with a body in the background with some Chinease music. The Gentleman (in their black suit and Tie) and the Ladies (in milk white dresses and laces with White roses in their hand) are both weeping. The Big question now comes whose death is this and who are they mourning for. Which side of the Atlantic do they belong. The Europeans claim that this is the body of the Euro. The US too want to claim that this body belongs to the Euro. But the problem the market has that it cannot decide. Pair Weekly bias Daily Bias GBPUSD UP UP AUDUSD UP UP This clearly indicates that the current state of the $ is in a flux. This is a Cross driven market where the $ is getting a little irrelevent. The Great trades could be EUR-JPY and AUD-NZD. Now see this Weekly Daily
Gold UP UP
Silver UP UP Crude UP Down This possiabily indicates that the grave belongs to the All the Fiats which could be burried together with a Tombstone on top made of Gold and Silver..... In the last six Months the clients made money inspite of the $ not gaining because of the Interest Rates advantage it enjoys over the Euro and Yen. Note: A trade taken on a Weekly model stays for 3-4 years while on the Daily model they last for 6-7 Months. This information has no Value for Intraday Guys.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 21/Nov/2006 at 5:02pm
|
This was published by EuroMoney on Dollar.... Sometimes the forex markets can seem a little complicated for us mere financial hacks. So my editor and I were eternally grateful when one senior London-based FX banker offered to draw us a simple diagram showing how the pieces all fit together. And http://www.euromoney.com/images/502/fx.scrawl.gif - here it is . Clear as mud, eh? Still, it was a very fine lunch...
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: prosperity
Date Posted: 21/Nov/2006 at 6:05pm
------------- |
Posted By: prosperity
Date Posted: 21/Nov/2006 at 6:09pm
|
Bubble,
What is happening to your bullishness on dollar (as compared to Rupee) ?
I lost Biggggggg molah since my US company shares have reduced significantly in value even though they are quoting at same dollar price .. but rupee price has gone down ?
How can you explain this ? Give me some logical reasons of why this is happening ? And is this a trend to continue or is this just a blip ?
Should i sell my US company shares now ?
I wanted to sell coz thatz equal to my complete Indian portfolio size ..
and that much in just one company ... so i wanted dilution and have been waiting for a price ...
Is dollar call now turned to medium term (2 years) bearish ?
If not, i'll hold for another 2 years... and wait for good dollar price of my US company stock..
Any help is highly appreciated. Thanx !
------------- |
Posted By: BubbleVision
Date Posted: 21/Nov/2006 at 6:11pm
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Yes prosperity.... That was based clearly while 45 held. That has now broken and i have been proven wrong by the Market.
i am still bullish on the Dollar Internationally against the Yen and the Euro. while Euro-$ trades below 1.3000. and $-Yen trades above 113.30 (Note weekly close levels)
Prosperity... The Rupee has gone up against the Dollar and NOT down as written by you. However the RBI aparently brought 1 BLN worth of Dollar near 44.36-70 ... and the market should not challange the RBI. However if 44.36 is broken(currently unexpected), we would see a fresh fall in the $ against the Rupee towards 43.50.
If you want to enter Indian stocks.. then you should sell out of your US investments and invest in india as if you look at a 3-4% fluctuation of $-Rupee you may miss out on the bigger gains, which could have been possiable in the indian market.
MY view for the $ remains the same .... Bullish internationally. However $-Rupee is not that sure. I am enjoying the long dollar positions as the Greenback currently yeilds significantly more than the Swiss Franc and Yen.
The Bullish Dollar view holds while the Dollar Index is above 83.00 on a monthly close basis. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: prosperity
Date Posted: 21/Nov/2006 at 6:13pm
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Pls. give your 2 yr. target/view on $/Re ? Shall i continue to hold my company shares ? Pls. reply to other questions in my earlier post ..
Thanx !
------------- |
Posted By: BubbleVision
Date Posted: 21/Nov/2006 at 6:31pm
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Prosperity.... i have replied earlier....
And i am not as sure about the $-Rupee...however the CURRENT trend for the $ is down against the Rupee. Note that this is current trend and trend may change or may not change in the Future.... ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 23/Nov/2006 at 12:57pm
|
Finally... the peices of the jig saw puzzle are falling in place. I had earlier noted that The "Euro" was in a Model "Buy" on the weekly and the daily time frame however the Swiss Franc was Not....
However the weakness of the Dollar in the last 4 weeks has been singificant and the Model has turned bearish...on the Dollar..against the Swiss franc.. Now the Model is bullish for the Euro, Pound and Swiss Franc against the Dollar.
While the Euro-$ Trades above 1.2750 on a weekly closing basis... the model will stay Bullish for the Euro. However the US dollar is still Positive against the Japanease Yen. This basicially implies a Gain in the Euro against the Dollar and Yen may be seen in the coming days. (Euro-Yen)... critical level is at 146.50. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: prosperity
Date Posted: 23/Nov/2006 at 4:48pm
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Bubble, I donot understand one thing -
When u talk of dollar, why don't u talk it in terms of dollar vs. rupee ...
Aren't u in india - and hence converting rupees to buy dollar ?
------------- |
Posted By: BubbleVision
Date Posted: 23/Nov/2006 at 5:42pm
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Prosperity.... I talk about Euro-$ and $-Yen because that is my area of interest. They are freely tradable currencies...while the $-Rupee is NOT. The Retail guys in India can "trade" the Euro-Dollar (and other majors) but they cannot trade the $-Rupee. Hence i talk about Dollar Internationally. After all...."There is magic in thinking BIG".....Dont you think so.... ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 24/Nov/2006 at 3:59pm
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Now....i would buy Flowers from Home Shopping network... to take on the Funeral of the Dollar... My initial direction was wrong... but i had cautioned when the model turned (when i wrote about the Funeral)... and then when yesterday $-Swiss gave way... i was petty sure of a Dollar Fall.
Atleast now the Things are much clear.... and that is the good part. A fall below 1.2750 now for the Euro now would be very very Surprising...
The Euro-Rupee warning was also well worth near the 200-MA .... as that cross bottomed exactly there. Now the Euro-Rupee is headed towards the 60.00 level. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 30/Nov/2006 at 5:32pm
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The GBP-USD hit its highest level since 1992 earlier today as the pair is leading the weakness in the US Dollar currently. Now this pair has come to the levels, from where it sold-off in the George Soros and the BOE fued.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 01/Dec/2006 at 11:59am
|
The Euro-Yen has hit fresh all time highs, as the Dollar continues to remain resiliant against the Yen. Most of the current Dollar weakness has been against the Pound and the Euro. It is also been week against the Swiss franc.
It is very very important to note that the Yen and the Swiss Franc are the two "funding" currencies in the world on which the whole "Carry Trade" sanerio has been built.
From now on It would be very very important to keep a close track on NZD-YEN and AUD-YEN to see the "carry trade"....
Dollar Index is currently near 82.47 and the Long term (VERY VERY Sinnificant) Support is at 80.00. Any break of thereoff could lead to very significant move...Possiabily a downward Spiral and a Can of worms....
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 07/Dec/2006 at 10:02am
|
I had a chat with a "Fundamental" friend on the dollar (he is based in NY and working for GS). He explained me the Following confusion in his mind....
"Lower Dollar ... results in Foregin goods getting expensive in the US, which in turn would lead to higher Inflation. The Inflation inturn leads to higher Interest Rates.....which in turn leads to Higher Dollar"......
 ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: Vivek Sukhani
Date Posted: 08/Dec/2006 at 12:36pm
| Lower dollar may be the panacea which the US is now needing possibly... it may help US to get rid of its twin deficit burden especially on the trade front. Possibly, its now time to long US stcks which have a major earnings coming through exports. Also, I see a disconnect in the above mentioned logic.... Higher interest rates doesnt lead to Higher currencies... its the rate of REAL Interest rate whose increase leads to Higher currencies.... so we have to compare the yield that would prevail along with inflation that would prevail at various points of time to come to the conclusion whether all these chain will ultimately will ultimately lead to Higher Dollar. |
Posted By: kulman
Date Posted: 08/Dec/2006 at 12:41pm
|
No wonder then, why Alan Greenspan used to call it a "conundrum"!
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: Vivek Sukhani
Date Posted: 08/Dec/2006 at 1:26pm
| Actually, all the three things are inter-related... interest rates, Exchange rate and unemployment rate... so, they always inter-play, and the market reacts simply thinkung that one play wont lead to the other play and in the process people get trapped. So, when Euro was near 1.18 they were all saying interest rate was behind dollar's rise.... now they are again saying interest rate as the logic....when Euro is trading near 1.33. Has just one ECB hike changed the entire dynamics.... Personally speaking, its the slope which matters nothing like current yields or current inflation.... but then bond yields are such a pathetic guide that more often than not its leads to wrong positional takes. People track Euribor-Eurodollar spreads nut I personally havent checked it. Mzay be thats a good signal???? |
Posted By: BubbleVision
Date Posted: 08/Dec/2006 at 1:36pm
|
As they say Vivek....
"Bond traders are from Venus.... and Equity traders are from Mars"
Actually... the one ECB rate hike yesterday was not the case... rather the spread between 10-Year bond-bund differencial has an impact on the Euro-Dollar rates. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 22/Dec/2006 at 5:57am
|
This one is for BubbleVision...I'm just pasting the relevant & interesting parts of interview.
http://money.cnn.com/magazines/fortune/fortune_archive/2006/12/25/8396775/index.htm?postversion=2006122210 - The man who saw the futures
Leo Melamed, godfather of the Chicago mercantile exchange, changed investing forever with financial derivatives. Here's what this market visionary thinks is next.Way back in 1972, the head of the Chicago Mercantile Exchange had a crazy idea: If you could trade futures on pork bellies, wheat and beef, Leo Melamed wondered, why not on Swiss francs or deutsche marks? Or any other financial instrument for that matter? That notion has radically changed the way market risk is managed.
How did you get the idea for financial futures? When I took over the Merc in 1969, I found an exchange that was just in the meats. Butter was gone, and eggs weren't trading. And I was deathly afraid that I'd be chairman of a single product exchange. Anything happened to that product, you're out of business. So I was looking around for new products, and I tried everything: I tried turkeys, I tried apples, I tried shrimp, I tried potatoes, I tried oranges. You name it, I tried it, but it was all agriculture. And then, finally, I came to the thought that Bretton Woods, the fixed-exchange-rate system, was coming apart. And when it finally comes apart, wouldn't there be a need for foreign-exchange futures? Our board thought I was crazy, and very frankly I thought it was a little crazy too, because why hadn't anybody else done this? I went to http://money.cnn.com/blogs/curiouscapitalist/index.html#116371008890393389 - Milton Friedman , though, and he absolutely embraced the idea.
So the board had to go along with me. And the minute we went to foreign exchange, I said to the membership that if it works in foreign exchange, the sky is the limit! I was like a kid in a candy store, honest to God. Because in agriculture, where could you go with it? But in finance - ah, look at this! I mean, whoa, anything you want! Do you think the big boom in derivatives is over? The last 30 years witnessed the development of derivatives markets in North America and in Europe, and it took the better part of 30 years. Asia has been lagging in this development, although there were pockets in Singapore and in Korea, and somewhat in Japan. But for the two major parts of Asia, which are China and India, it is just beginning. And China just announced it will open a derivatives market for financial products. It will be opened early next year, and it will be a stock index market. So the growth coming will mostly be from Asia, but it won't take 30 years because everything is so much faster. Which do you think has the most potential? I think real estate is the most exciting. [The Merc began offering housing-index-based derivatives contracts trading in 2005.] What's made you so interested in markets? It's so hard to psychoanalyze oneself. I lived the early part of my life on the run, from both the Nazis and the KGB. While we were doing this change from country to country, my father, who was a teacher, would always sit me down and explain, "Look, the Lithuanian lit is worth so many rubles." Except he always said remember the official rate isn't really the real rate - you've got to go to the black market to get the real rate. You don't think that had an effect on an 8-year-old as I was traveling and I learned how you transfer one currency to the next? Of course it did. And what are you trading yourself these days? ...Foreign exchange! ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 22/Dec/2006 at 9:44am
|
Thanks Kulman...really interesting that they even tried potatos!
Nymex was originally called "US eggs and onion exchange"!. Now they trade everything apart from Egg and onion. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 29/Dec/2006 at 9:29am
|
UK Telegraph: The French people have turned against monetary union for the first time since the launch of the euro five years ago, underscoring the fragility of an experiment that draws its lifeblood from French and German popular acceptance. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 29/Dec/2006 at 9:35am
|
The European Central Bank has just reported that, "The euro recently surpassed the dollar in terms of the amount of bills in circulation worldwide" ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 02/Feb/2007 at 9:23pm
|
Guys.. see what BLS did to the NFP today.... These Statisticians should be given a pink slip.
They have revised the Data for whole 2006 for the 12th time
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: basant
Date Posted: 02/Feb/2007 at 9:52am
|
They have revised the Data for whole 2006 for the 12th time
_________________________________________________________
Goodness Gracious. DOes anyone know which college they have graduated from? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: BubbleVision
Date Posted: 27/Feb/2007 at 7:05pm
|
And Now comes the Biggest Dollar-Yen Single day fall since 17-May-2006.
Does any one rembember the date? ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: omshivaya
Date Posted: 02/Mar/2007 at 4:06pm
|
Bubble ji and basant ji,
I have a query regaring "borrowing money in yen". Borrowing money in yen costs very small interest(now 0.5% p.a. I think).
Is there anyway that we can borrom money in yen, at tha interest rate. Even if we borrow 100,000 yens let's say and use that money to invest somewhere and even if rs/yen fluctuates, still the stock market in India can give a decent enough return to pay off the yen loan and keep the rest.
I would like to venture into this idea. Since it is so simple, obviously there are catches and many people may have thought of it before. What are the entry barriers if any?
And if we join together as a team, TED...and try something...can we find a way out in someway to borrow in yen?? The interest rates are so crazy.
WAt do you think ? I believe until we take a 1st step, we wouldn't even know what the paths are for the solution. Let's try plssssssssssssssssss!!! ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: BubbleVision
Date Posted: 02/Mar/2007 at 4:14pm
|
Om - Detailed explanation later on in the day with a calculation! On http://theequitydesk.com/forum/forum_posts.asp?TID=72 - this page
In short you are wanting to create a JPY-INR "Carry Trade". ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: omshivaya
Date Posted: 02/Mar/2007 at 4:20pm
|
Dunno what this JPY-INR "Carry Trade" means technically. But I would like to borrow yen at that 0.5% interest rate and invest in India.
So, where do I get that Yen first of all, what are the risks and if it is such a good idea, why doesnt everyone do it??
Thank you Bubble ji...will wait for that explanation but more than that...a legal way around ot find a solution. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: BubbleVision
Date Posted: 02/Mar/2007 at 4:38pm
|
Om - You personally cant do it but our US Counterparts (or one's from outside India) can! Detailed reply later on inthe day
In India only Corporates can do it.
Interest is paid back in Yen Libor. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 02/Mar/2007 at 5:26pm
|
Om and Guys see a Liquidating forex Market now..
See NZD-JPY and AUD-JPY. "Carry Melting" ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: omshivaya
Date Posted: 02/Mar/2007 at 5:45pm
Bubble ji, I would waiting for that detailed reply of yours later as you mentioned. For me, "kala akshar bhaais barabar" on what you wrote above.
I am afraid you would need to talk like a layman in forex or yen, inr, usd terms. Would really appreciate it.
Thank you verrry much. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: BubbleVision
Date Posted: 02/Mar/2007 at 9:51pm
|
Interest Rates in
Reply: Yes this is possible. However in How this is done: Borrow in Yen and bring the money to Risk: Unstable currency rates are the biggest risk to any “Carry trade”. If the carry differential is 5.5% (JPY-INR) … then the borrower would start to lose if Yen gains more than 5.5% against the Rupee. If the Yen gains 4% then the interest rate enjoyed would be reduced to just 1.5% (original 5.5% - 4% lost on currency) Removing Risk: Yes Risk Removal from Carry-Trades is possible. First see the trade. Mr. A takes a Yen Loan from BOJ and brings his money to Using Forwards: For effective Risk removal Mr. A would have to Buy JPY-INR. He can buy the One year Forward of the cross. However the one year forward rate would already factor in the interest rate differential and the 1 year forward of JPY-INR would be 40 if the spot is 38. So one would NOT enjoy the interest rate differential if he tries to hedge the risk by using the forward market. Using Options: Risk Removal is possible using various option structures like buying a Yen call Rupee Put. Yes one has to pay a small premium which eats away part of the Differential but then a lot of risk from the trade would be reduced. To reduce to premium paid on the option one can sell KO options and also KO on KO. Other “Cheap” option strategy would be to buy a Yen Call Knock in which is currently 5% away from the current spot. There are various other option structures which could be used for reducing the currency risk, which if I discuss here would confuse all of you. We advise corporates on hedging Forex Exposures Please post any questions…. * 100 Yen = 38 Rupees ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: omshivaya
Date Posted: 02/Mar/2007 at 11:49pm
|
Well, if someone has a relative or friend in Japan and he sends in Yens then? As a gift or whatever...there could be a max. limit etc. Just taking an example.
Bubble ji, can't we try to find a way out of this, some loophole something. Eve if yen rallies 4%, even then it is far better than taking a personal loan in India. This is such a great avenue...it is our duty to find a loophole. Surely, some expert can provide some answers.
If someone sends us in form of gift or anything, we can pay him 5% interest+principal and keep the returns from the money he sends. I am just trying to find out a way...expert comments needed!!! ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: basant
Date Posted: 02/Mar/2007 at 6:46am
Om ji are you intending to do an open offer for Nucleus with that cash? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: kulman
Date Posted: 02/Mar/2007 at 9:26am
|
Yes, he seems to have a yen for controlling stake!
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 02/Mar/2007 at 9:35am
|
Om - Once again ... No "Ji" please and I am no expert.
---------------
If someone recieves a Gift of a Million Yen .. then he does NOT have to pay back .. since this is a "gift". He will not have to pay interest also and hence there is NO carry involved.
There are NO loopholes (Of what i am aware of) ... Only Corporates can do an ECB or FCCB. Individuals cannot do it. Even if individuals do.. then they will have to find a "Financing" bank in Japan who is willing to lend them.
When Yen Rallies.... It does so more then 4% in 48-50 Hours. ....Look at NZD-JPY. That particular pair had the biggest carry and when the meltdown happened this week.. The NZD lost 9% in a week against the Yen and all the potential carry profits have gone out of the wind.
Historically most famous "Carry-Unwinding" happened in Aug-Oct 1998 when LTCM Failed. $-Yen fell from about 147.63 to 111.53 in these three months (Yen gained 25%) leading to only losses on those who created "Carry Trades".
The most severe fall was between 02-Oct-1998 and 09-Oct-1998 where the Yen gained 17% in a week. ... It gained 10% in 3 hours sometime during the week...showing a Liquidating FX Market.
Note this was the reaction of $-Yen... while the more popular highyeilders "Carry" like "NZD-JPY", "Aud-Jpy", and loads of other crosses... The fall was extremly large. ... Yen gained 100% against the NZD in 1997-1999 leading to "the Death of Carry" at that point of time.
This round of Carry Trades began in 2004 when the Bank Of Japan Interveined to stop Yen appreciating against the Dollar. (It was aparantly the biggest ever FX intervention worldwide). That created a floor for the $-Yen and the "Carry became the King" once again.
Note historically Carry Trades have a big fall ONLY after Fed starts rate cutting on the Dollar.. Which has NOT happened this time yet. So this latest fall in the $-Yen looks only a wobble which could recover soon.
The second biggest currency used for carry is the Swiss Franc (CHF) which also has very low interest rates. I think Sandy can use that to create a carry (if he wants) as he is based in Swiss currently.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 02/Mar/2007 at 9:45am
|
In 1998 the hedge fund "Tiger Management" of Julian Robertson ... Lost $2 Bln in that week between 02-Oct and 09-Oct..on melting carry. (according to sources since these things are never confirmed).
When Carry Melts ... there is NO Floor --- justifying the following quote.
"The market can stay irrational longer than you can stay solvent." -- John Maynard Keynes ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: basant
Date Posted: 02/Mar/2007 at 9:57am
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This is a link where you can get more infor on Julian Robertson.Incidentally we have him on our hall of fame!
http://www.theequitydesk.com/julian_robertson.asp - http://www.theequitydesk.com/julian_robertson.asp
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: BubbleVision
Date Posted: 02/Mar/2007 at 10:19am
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Great BasantJi .. I did not look that before. He is famous no doubt but also for wrong reasons. Here is an extract from one of the link that I found out.
From http://www.almartinraw.com/public/column219.html - Link
For the record, Julian Robertson was the fund manager of Tiger Management Group, which had $23 billion at its peak and $6 billion when it was rolled up. Robertson has admitted that he doesn’t understand the markets and thus missed one of the most dynamic bull periods in the market (1998-2000) and then again missed a second bull market move from 2002-present. Nevertheless he now wishes to form yet another hedge fund. Undoubtedly, he will name it after some other species of cat. But will this new Robertson “cat” fund defang investors’ wallets again?
One can just google "Tiger Fund of Julian Robertson" for lots of pages on him.
* Disclamer: I am NOT trying to show the legend in any negative light. He is a great market veteran who has made a fortune in the market and I would consider my life as Suscessful if I earn even 50% of what he has made. This is a link that I have got and hence this post.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: basant
Date Posted: 02/Mar/2007 at 10:42am
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Wow! I did not know all that! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 02/Mar/2007 at 11:37am
Very interesting information Bubbleji(dont  me for this, am used to it sorry). So, it's a highly risky business it seems even if the leverage is 1:1. Anyhow, since we can't borrow as individuals and no loopholes and since I have no contacts in Japan or in a Japanese bank, so one idea downthe drain...yahoooo  ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: Mohan
Date Posted: 02/Mar/2007 at 11:58am
The BSE and NIFTY had the big fall around this time. right ?
This yes carrry trade has been responsible for a lot of meltdowns.
The Bank rate in Japan was 0 % and it has just now been raised to .50 %
This is one of the reasons why a lot of carry trades are coming apart.
------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: BubbleVision
Date Posted: 03/Mar/2007 at 12:09pm
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The gravy train started on that date... Copper, Gold, MSCI EM, MSCI World, BSE, Nifty.... they all topped around that time.
Copper and Gold infact made the highs on the same day (17-May).
All Asset markets sold off 20-40% in the subsequent 2 months. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: Mohan
Date Posted: 03/Mar/2007 at 12:18pm
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Maybe this yen carry trade is the source of all this liquidity.
now with the yen appreciating, since the BOJ raised the interest rate, liquidity will get tighter. Wonder how that will effect Indian markets since liquidity has been one of the driving factors. ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: BubbleVision
Date Posted: 03/Mar/2007 at 12:27pm
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BOJ Does NOT want the $-Yen to fall (Carry to melt). They intervene heavily through Kempo to put a bid in the $-Yen. A carry meltdown only happens when US Fed decides to cut interest rates.
The rates in US are 5.25% and Japan was 0.00% and they hiked 0.25% on 14-July-06 and then again 0.25% on 21-Feb-07. These hikes are negligiable compared to the yeild differential which the carry is giving.
"Carry melting" due to BOJ is senseless reason given by the media.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: Mohan
Date Posted: 03/Mar/2007 at 10:52pm
NNobody wants $ yen carry to melt. but melt it has.
Rate hikes are negligible but currency fluctuations are not.
Note the surge in yen.
In this scenario BOJ raised rates and greenspan's comments about a possible/probable US recession spooked market to believe that a reduction in US rates would squeeze yield differential.
On top of this a lot of hedge funds have highly leveraged portfolios created on the back of capital from these yen carry trades.
seems almost like a conspiracy theory ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: manishdave
Date Posted: 03/Mar/2007 at 3:26am
| Another interesting carry trade is gold carry trade. Banks "LOAN" gold from reserve bank, sell them in mkt and put money in bonds.... |
Posted By: BubbleVision
Date Posted: 03/Mar/2007 at 8:47am
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Mohan - Even after the surge in Yen....It is still down for the year against the Euro and flat against the Dollar indicating the extent of Yen weakness which was there before last week.
Manish - when the gold carry unwinding happens .... it would be fun to watch.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |