Quite the opposite. SMI is negative appx 1% as I write - EURCHF spot is 1.5689, going up. The interest rate differential favours the Euro right now.

Paul

We should also anticipate reductions in mortgage interest rates following this SNB reduction.
Comically I read the rents are rising in Zurich because of the new way that they relate rentals to interest rates.

Marton

Interest rate cuts are normally positive for stocks and negative for currencies but as I said on the other thread, interest rate cuts which have been anticipated tend to get priced in ahead of the announcement and so can have fairly minimum impact when they get announced, unless there is a surprise element like the Bank of England dropped on us. About the lessons in finance, now is not the best time to look for text book theories playing out in real markets as the text books are in the process of being re-written! However don't let it stop you observing. Now is a great time to learn lessons in market behaviour.

LOL...
Ten days ago I met a young salesman working for one of the better known structured product desks in London.
Fresh out of university "indoctrination"... his bosses, and other "veterans" just keep on telling him to throw the books away and to learn by the day.
To many successful pros, what is happening is so incredible.... to him it made no sense at all.
We truly are in uncharted (and who knows just how dangerous) waters.

Go with the flow and don't look for automatic correlations is the only thing I can suggest to anyone looking at this mess from the "outside".

Ciao

Paul

Is it true that the pound is losing value because of speculators?

http://www.guardian.co.uk/business/2...hange-rate-low

Who exactly are the ' speculators?

I think that it is more than speculators, but I have lost the advisor whom I used to bounce ideas off, for them to explain stuff. Now I am floundering around in the dark trying to find out if this: http://www.foreignaffairs.org/199503...ach-other.html has any relevance.

Anyone who makes a pure risk bet in one currency against another is a currency speculator and the biggest currency speculators have been hedge funds and the proprietary FX trading desks of large financial institutions.
Speculation has not been in the driving seat during sterling's slide this year. The £ has been in a tail spin because of dramatic cuts in interest rates and the lousy uk economic outlook. With sentiment against the pound so bad, there are certainly speculators betting on further weakness but the decline has been much more fundamental and broad based. Before it’s collapse, sterling was held up by high interest rates and very cheap credit. When those props were removed it was a one way, downward spiral fuelled not just by the direction of interest rate cuts but also the pace and magnitude of the cuts compared to say, the Euro. Carry trades played their part in supporting sterling's previous strength and unwinding of those trades contributed to sterling's slide (let's say it had further to fall) but carry trades are more interest rate arbitrage than currency spec. per se and those unwinds were more a consequence of the Bank of England's interest rate policy. The weakness against the dollar and yen particularly has been skewed further by the flight to quality into these reserve currencies.

Dude, wanna launch an FX fund? I'm game

P.

I suppose that if we tell the Government we are broke then they will give us a few billion to start our FX fund?

Marton

A while back somebody (maybe Nev) said that we should all hope that the CDO markets do not come unwind. That was sometime in early October and I am wondering now as the year comes to an end, where are the CDOs going? Does it matter in this context that many big companies (such as those in the car industry) have major financial problems and may go bankrupt? They should be heavy loan takers, and therfore somehow conneted to the CDO market?

And one more question: somebody said here on the EF that ups or downs in the stock market index do not matter if the volume is low. Could somebody give a value for the SMI, what is <<low>> <<normal>> and <<high>>?

__________________
Everything is simple when it's clearly explained

As far as the second question is concerned, here is the
link to SMI closes + volumes (you might have to register - free- on http://www.six-swiss-exchange.com).

Re. the CDO market... it's coming unglued as we're talking, just give it time. This event - along with others - is being overshadowed by the alphabet of bailout measures (TARP / TAFL, etc) that is being thrown at the deathbed of the financial sector.

Ciao

Paul

I’ve certainly never said that market direction doesn’t matter if volumes are low. What I think I did say once was that when a market gaps down it deosn’t mean there has been an exodus from stocks if the volumes are low because in low volume days small amounts of money can move the market.
So what I meant was volumes are relevant in the sense that the higher the volumes, the more momentum (commitment and urgency) is behind the move in any direction. In other words, the higher the volumes, the higher the significance of the moves. High volume in a bull market is good, especially if accompanied by low volume in any days when the index is down. High volume in a bear market is bad, especially if accompanied by low volumes in any up day. Volume patterns like this confirm the directional trend with the low volume days being seen as corrections before the trend resumes.
Volumes can fall and remain low after the force of a major market correction is spent and investors and traders sit on the sidelines, wait for the dust to settle and look for signs of the direction of the next wave to establish itself. These periods can be accompanied by high volatilty or low volatility which is an indication of how nervous the market is. And don’t forget that seasonal factors like Xmas can lead to low volume.

You can basic volume analysis from:
www.finance.yahoo.com.
Type in the index ticker in the quote box and press “quote”. When the index details come up go into “”charts and hit “basic technical analysis”, select the date “range” you want then hit “volumes” in overlays. This will give a direction and volume analysis.
http://finance.yahoo.com/q/ta?s=%5ED...&q=l&p=v&a=&c=
If you select an extended period, say two years, you will get an idea of average volume.

Generally in the CDS market spreads have narrowed vs a few months ago but the market remains volatile especially in individual names

Strange year
now we have Bernard Madoff who seems to have diverted $50Billion.

According to the papers UBS & CS were direct investors but likely relatively small amounts. Some of the private banks are deeper in; they must be sweating a bit
Not CS, I misread the article

Marton
17/12 " I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them," said SEC commission Chairman Christopher Cox in a written statement."

Box & Cox
"Barack Obama is on Friday expected to name Mary Schapiro, head of the securities industry’s self-regulatory body, as chair of the Securities and Exchange Commission, according to senior Democratic officials."

I was told about carry trades unwinding and other stuff about 1 year ago. 3 years ago I was told about the Subprime. The same person also tried to explain trading to me, but it always sent me to sleep. Staring at all those screens and charts made me think that they can't see the woods for the trees. Now all their adrenaline, wining and dining are on the back burner. I just follow my gut, some things interest me. I think that the foreign exchange is being manipulated by the banks. China would like it to be them, but it isn't. This interests me: http://www.commodityonline.com/news/...13224-3-1.html and Volcker. Of course it might all be bunk, just my crazy ponderings- what do you think?

I think you're on to something. The credibility of GATA — and the idea that the central banks manipulate the foreign exchange — seem to grow more credible as the current crisis continues to unfold.

I've also been watching the US$ versus CHF trends. The dollar was steadily gaining traction against the CHF until December 9, since which it has steadily slipped from 1.16 to 1.06 today (my bank's rates). Though the two currencies seem to be inextricably joined at the hip (as explained in Part IV of this article), I'm (naively?) hopeful that Swiss policy makers will make an effort to rescue the CHF from sharing the Dollar's demise, if that's possible.

__________________
"Live every day as if it were going to be your last; for one day you're sure to be right." — Harry Morant

I don't know much about the Gold market so I can not give an informed opinion. It seems odd to me that the gold bar & coin producers have beeen working flat out for months now (weekends & nights) to keep up with demand but without consequent gold price increases.
The story is that this demand is balanced by the drop in demand for gold jewellery but this does not make sense to me.
If the factories are working flat out then demand is up!

Anyway the Federal Reserve Bank seem to have reduced their rate to practically zero (more than the 0.5% widely anticipated) so now we wait to see if the ECB can hold out or will follow with some cut after Christmas (followed by the SNB) - all depends how the $ moves.

Marton

From today's FT
"Eleven of the world’s biggest banks were downgraded Friday by Standard & Poor’s after the credit ratings agency said the current downturn could be longer and deeper than previously thought.
Six major US banks were downgraded, including JPMorgan Chase, Bank of America and Wells Fargo, as well as five banks in Europe.
The agency cut its ratings on Citigroup, Morgan Stanley and Goldman Sachs by two notches each. In Europe, S&P shaved one notch off the ratings of Barclays, Credit Suisse, Deutsche Bank, Royal Bank of Scotland and UBS"

See any familiar names in the last sentence?
Not funny any more?

Marton

Help me Marton- I don't really understand- I'm not a finance person. It does say 12 banks downgraded, but looking at this it seems as the rating for UBS and CS has improved? What does this mean if you have cash in these banks- are they likely to collapse? Will the govt. really pay out? http://www.englishforum.ch/newreply....ote=1&p=369617 Major Banks' S&P Ratings Bank New Rating Old Rating Bank of America AA-/Negative/A-1 AA/Watch Neg/A-1 Barclays Bank AA-/Negative/A-1 AA/Watch Neg/A-1 Citibank A+/Stable/A-1 AA/Watch Neg/A-1 Credit Suisse A+/Stable/A-1 AA-/Watch Neg/A-1 Deutsche Bank A+/Stable/A-1 AA-/Negative/A-1 Goldman Sachs A/Negative/A-1 AA-/Negative/A-1 HSBC AA/Negative/A-1 AA/Stable/A-1 JPMorgan Chase AA-/Negative/A-1 AA/Negative/A-1 Morgan Stanley A/Negative/A-1 AA-/Negative/A-1 Royal Bank of Scotland A+/Stable/A-1 AA-/Stable/A-1 UBS A+/Stable/A-1 AA-/Watch Neg/A-1 Wells Fargo AA+/Negative/A-1 AAA/Watch Neg/A-1 Source: Standard & Poor's

I'd say that Deutsche Bank's last step of not repaying the callable bond that was optionally due (bloomberg article) is especially troubling, and hints to more fragility and potential problems for most of the important banks down the road.

<rant>
I reiterate - whoever manages to express any form of "fundamental valuation" on banking stocks right here right now, deserves to be interned in a psychiatric ward :-/
</rant>

Paul

Well if you want a headache read the more detailed Standard & Poors analysis here!!
http://www2.standardandpoors.com/por...842660909.html
You can also register free and call up the rating on an individual bank.

It is a difficult time for the credit rating agencies because the rule book has gone away. It is anyway complex to credit rate a bank. When S&P do this exercise they get a result BUT before they can publish the result now they have to consider that a Government may step & support the bank. So does this possible support give the bank a higher rating or should they ignore possible Govt. support?

Traditionally it simply meant that when the banks want to borrow money in the market they will probably have to pay higher interest & maybe find fewer lenders.
Today I am not sure what it means; interbank interest rates are on the floor, there are fewer lenders interested in banks & anyway central banks seem happy to lend enormous amounts at rates close to 0%.

The new ratings are all in the various "A" ratings so collapse is not foreseen. If they were to reduce ratings in the future then that would be another matter.

Of course they would want to see account holders compensated & would try very hard to achieve this.
If you have large cash amounts & are concerned then spread your money around several banks including Kantonal & Post.

Marton

Thanks, My accounts are a fri....ing nightmare, I'm losing track.