Eurozone Bank Risk
27/02/09 20:23
Hello Traders,
Please listen to this 5min video clip from John Mauldin on his view about Eurozone bank risk, which i have been discussing in Pro Traders Club and via information from the banks noted in the blogs.
My view is that as the "Eurozone Bank Risk" story unfolds, this will weigh heavily on the EUR vs the crosses and we will likely see lower levels for EUR in the longer term. Furthermore, the Eurozone is behind the curve in shifting monetary policy and implementation of Quantative Easing to stem the short term impact of the crisis.
I also recommend that you subscribe to John Mauldin's newsletter "Thoughts from the Frontline", the link is available in the text of the page via this link .
Good Luck with Your Trading and Be Careful Out There!
Chris Lori
CTA
Please listen to this 5min video clip from John Mauldin on his view about Eurozone bank risk, which i have been discussing in Pro Traders Club and via information from the banks noted in the blogs.
My view is that as the "Eurozone Bank Risk" story unfolds, this will weigh heavily on the EUR vs the crosses and we will likely see lower levels for EUR in the longer term. Furthermore, the Eurozone is behind the curve in shifting monetary policy and implementation of Quantative Easing to stem the short term impact of the crisis.
I also recommend that you subscribe to John Mauldin's newsletter "Thoughts from the Frontline", the link is available in the text of the page via this link .
Good Luck with Your Trading and Be Careful Out There!
Chris Lori
CTA
Bernanke Deflects the “N” Straw
24/02/09 23:01
US Markets rallied as Fed Chairman Bernanke's noted
that he did not believe nationalization of banks was
in the current picture. The S&P500 rose by 4%,
while the Nasdaq roes by 3.9%. In the FX world this
translated to EURUSD rallying to a high of 1.2860,
from a low of 1.2700, while USDJPY traded up to a
high of 96.93 from a low of 95.05. This news poked
risk aversion after six days decline. Any excuse will
do.
In his comments to Congress, Bernanke said that full nationalisation does not make sense, he said that "I do not see any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalise a bank when it just is not necessary".
Otherwise, his prepared remarks before the Senate Banking Committee did not offer much new information about the outlook for the economy and policy. In reading between the lines, the FED knows the outlook is dismal, but only share on a need to know basis.
Read More...
In his comments to Congress, Bernanke said that full nationalisation does not make sense, he said that "I do not see any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalise a bank when it just is not necessary".
Otherwise, his prepared remarks before the Senate Banking Committee did not offer much new information about the outlook for the economy and policy. In reading between the lines, the FED knows the outlook is dismal, but only share on a need to know basis.
Read More...
Investors could fade the latest rally in risk sentiment
23/02/09 21:21
Upcoming Forex
Workshops
with Chris Lori, CTA and Fund Manager – www.protradersclub.com
Charlotte, NC
May 1-3
London, UK
May 15-17
Details Coming Soon! Please check the Workshop Page for more information.
Next Batter, Ben Bernanke!
Ref: UBS, Bloomberg
The US dollar rallied and equity markets fell as risk aversion rose again on bank nationalization fears. The US Treasury, FDIC, OCC, OTS, and Federal Reserve issued a joint statement stating that the stress test on the banking system will begin on Feb 25 and indicated that they would prefer not to have to nationalize banks. Should the stress test not have been done five years ago, or more? Fed Chairman Bernanke is scheduled to deliver his semi-annual monetary policy report testimony before the Senate Banking Committee in the US session. We anticipate that he will indicate rates will remain low & for some time." He will probably be challenged for a comment on the government nationalizing U.S. banks, as well as any specific details on the "stress tests" that some U.S. banks will soon undergo. The market will likely react to any unsettling verbiage from the masters who created the mess. Probability weighs in favor of further negative news on the state of the economy, which will continue to jack up the world reserve currency.
Read More...
with Chris Lori, CTA and Fund Manager – www.protradersclub.com
Charlotte, NC
May 1-3
London, UK
May 15-17
Details Coming Soon! Please check the Workshop Page for more information.
Next Batter, Ben Bernanke!
Ref: UBS, Bloomberg
The US dollar rallied and equity markets fell as risk aversion rose again on bank nationalization fears. The US Treasury, FDIC, OCC, OTS, and Federal Reserve issued a joint statement stating that the stress test on the banking system will begin on Feb 25 and indicated that they would prefer not to have to nationalize banks. Should the stress test not have been done five years ago, or more? Fed Chairman Bernanke is scheduled to deliver his semi-annual monetary policy report testimony before the Senate Banking Committee in the US session. We anticipate that he will indicate rates will remain low & for some time." He will probably be challenged for a comment on the government nationalizing U.S. banks, as well as any specific details on the "stress tests" that some U.S. banks will soon undergo. The market will likely react to any unsettling verbiage from the masters who created the mess. Probability weighs in favor of further negative news on the state of the economy, which will continue to jack up the world reserve currency.
Read More...
Roubini on Eurozone Bank Risk
22/02/09 19:48
Traders, as a contribution to your ongoing economic
education, please listen carefully to this Bloomberg
interview with Nouriel Roubini, it is outstanding, in
my view. He explains things in a clear and
comprehensive manner.
For some time, I have been addressing the issue of Eurozone member risk and bank risk related to large having the capacity to carry the risk of the small.
In this Bloomberg interview, Nouriel Roubini, one of the worlds foremost economist's, clearly explains the imminent bank risk in Eurozone and global circumstances.
This supports my view that the Eurozone is behind the curve in stemming the crisis and has greater exposure to bank risk than other regions. This will continue to weigh on the EUR in the longer term, regardless of global risk appetite and USD sentiment. We have been selling cash EUR on rallies. There is a risk of a larger retracement rally in the near term, which should present the opportunity to sell more or resell a percentage of the reduced holdings (that which has been bought back in the recent sell off).
Here is the Bloomberg/Roubini link:
For more information on our analysis, views and strategies, join Chris Lori's Pro Trader Market Reviews at www.protradersclub.com
Chris Lori
CTA, FX Fund Manager
Read More...
For some time, I have been addressing the issue of Eurozone member risk and bank risk related to large having the capacity to carry the risk of the small.
In this Bloomberg interview, Nouriel Roubini, one of the worlds foremost economist's, clearly explains the imminent bank risk in Eurozone and global circumstances.
This supports my view that the Eurozone is behind the curve in stemming the crisis and has greater exposure to bank risk than other regions. This will continue to weigh on the EUR in the longer term, regardless of global risk appetite and USD sentiment. We have been selling cash EUR on rallies. There is a risk of a larger retracement rally in the near term, which should present the opportunity to sell more or resell a percentage of the reduced holdings (that which has been bought back in the recent sell off).
Here is the Bloomberg/Roubini link:
For more information on our analysis, views and strategies, join Chris Lori's Pro Trader Market Reviews at www.protradersclub.com
Chris Lori
CTA, FX Fund Manager
Read More...
Eurozone Bank risk in Eastern Europe, much more to come on this story
18/02/09 19:39
Ref: UBS
Investors gave a lukewarm reception to the government's new plan to stem housing foreclosures even though the plan was more ambitious than originally anticipated. President Obama outlined a program that will include $75bn to assist struggling homeowners who are at risk of foreclosure and those who have difficulty refinancing mortgages because of a drop in the home value. The program will encourage loan modifications through lower interest rates and incentive payments and relax lending standards by the GSEs for mortgage refinancings. We're not sure how this will play out in the end and I doubt we will see a material impact, overall. He also said the government would extend an additional $200bn of backing to the GSEs in order to ensure credit availability. Economists believe that while this plan is not likely to lead to immediate success and will not prevent all foreclosures, it will likely be more successful than previous efforts to date, as it includes incentives for both borrowers and lenders. The plan is expected to take effect on March 4 and additional details on the guidelines will be published then. The plan comes on the back of more weak housing data, as housing starts missed expectations (466k vs. consensus 529k, prior 550k) and building permits were also down (521k vs. consensus 525k, prior 549k). In other news, the Fed took the new step of announcing longer-term economic projections, including a long-term inflation goal of 1.7-2.0%, with the latest FOMC minutes. The inflation goal is a step towards inflation targeting, though it represents more of an informal target. In separate comments, Fed Chairman Bernanke said he still expects "extraordinarily challenging times" for the economy and the Fed, which is consistent with ongoing credit easing and no change in the funds rate for some time.
Read More...
Investors gave a lukewarm reception to the government's new plan to stem housing foreclosures even though the plan was more ambitious than originally anticipated. President Obama outlined a program that will include $75bn to assist struggling homeowners who are at risk of foreclosure and those who have difficulty refinancing mortgages because of a drop in the home value. The program will encourage loan modifications through lower interest rates and incentive payments and relax lending standards by the GSEs for mortgage refinancings. We're not sure how this will play out in the end and I doubt we will see a material impact, overall. He also said the government would extend an additional $200bn of backing to the GSEs in order to ensure credit availability. Economists believe that while this plan is not likely to lead to immediate success and will not prevent all foreclosures, it will likely be more successful than previous efforts to date, as it includes incentives for both borrowers and lenders. The plan is expected to take effect on March 4 and additional details on the guidelines will be published then. The plan comes on the back of more weak housing data, as housing starts missed expectations (466k vs. consensus 529k, prior 550k) and building permits were also down (521k vs. consensus 525k, prior 549k). In other news, the Fed took the new step of announcing longer-term economic projections, including a long-term inflation goal of 1.7-2.0%, with the latest FOMC minutes. The inflation goal is a step towards inflation targeting, though it represents more of an informal target. In separate comments, Fed Chairman Bernanke said he still expects "extraordinarily challenging times" for the economy and the Fed, which is consistent with ongoing credit easing and no change in the funds rate for some time.
Read More...
ECB Dovish and Lower Equities Does Not Help EUR
10/02/09 23:49
The markets were disappointed by the lack of clear
details in the Treasury's bank bailout package, now
named "The Financial Stability Plan". The S&P500
closed lower by 4.9%, which in the FX world,
corresponded to the USDJPY falling from around 91.20
levels to settle between 90.20 and 90.40, while
EURUSD also traded lower from above 1.3050 and
finishing the session around 1.2980. In bond markets,
2-year Treasury yields fell by 12bp to 0.9%, while
10-year yields fell by 17bp to 2.82%.
Read More...
Read More...
Risk Appetite Improves
03/02/09 22:08
The improvement in risk appetite is due to a number
of factors. Namely, the stabilisation in PMIs in the
Eurozone, coupled with this week's improvement in
manufacturing ISM (both data sets for January) must
be removing some fears of further massive downside
risks. Also, various stimulus packages have been
announced, with Australia revealing a second stimulus
package yesterday and the BoJ announcing it will
purchase stocks held by Japanese banks. Indeed, this
morning, Australian retail sales for December rose a
staggering 3.8% m/m, fuelled by cash handouts from
government. There is the thought that this
demonstrates that government policy can be effective
in preventing a downward spiral in aggregate demand,
at least for the short term. But you know me, i'm not
convinced throwing cash at the problem is going to
demean the overall force of the down move. In US data
released overnight, pending home sales for December
rose by 6.3% m/m and above market expectations of a
flat result as home affordability rose. On a more
negative note, vehicle sales for January plunged, and
aggregate US car sales are now below China for the
first time. Read More...