On the interplay between the FED and STOCKS: Since Sept 1 – when QE was becoming a mainstream focus – if you only owned S&P on days when the Fed conducted Open Market Operations (in US Treasuries), your cumulative return is over 11%. in addition, 6 of the 7 times when S&P rallied 1% or more, OMO was conducted that day. this compares to a YTD return of 5.8%. the point: you would have outperformed the market 2x by being long on just the 16 days when – this is the important part – you knew in advance that OMO was to be conducted. The market's performance on the 19 non-OMO days: +70bps.
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A drop in claims for new unemployment benefits, as well as a Federal Reserve report that the economy grew at "modest pace" between September and early October, may be giving investors reason to halt the rally in stocks, said Todd M. Schoenberger, managing director, LandColt Trading.
That's because the somewhat brighter economic news evident in these reports could mean the Fed elects to either not buy assets to boost the economy, or buys fewer than the market has been anticipating, Schoenberger said.
"That would explain why stocks are selling off: people are looking at the data, and saying, this just doesn’t make sense," he said.
http://www.cnbc.com/id/39784531Read more…
Bernanke Says Fed Does Not Engage In Stock Market Or “Individual Stock” Manipulation; Some Loose Ends On FX Swaps.
Another wonderful question to which Bernanke, unless he had completely lost his mind, gives a negative anwer, is whether any foreign banks that were the recipients of FX swaps, used the proceeds to buy US Treasuries. Obviously, Bernanke's answer is no, as this would be yet another shadow monetization process.
Tyler Durden|Zerohedge.com
http://www.menwithfoilhats.com/2010/06/bernanke-denies-stock-market-manipulation-by-federal-reserve/Read more…
If you think all the game-changing decisions to be made on November 2 will be by voters at the ballot boxes, think again!
In his latest online presentation, Monty Agarwal reminds us that, on that very same Tuesday, Fed Chairman Ben Bernanke will …
corral together the other voting members of the Federal Open Market Committee …
send any dissenters off to the shearing shed, and …
before the following day, close the deal on QE2 — the next major round of mass money printing.
How ironic the twists and turns of history can be!
http://www.fxstreet.com/fundamental/analysis-reports/two-gamechanging-decisions1019/2010-10-19.html?utm_source=forexedgenews&utm_medium=twitterRead more…
Since 2008 it's really changed. To get around the government and media focus on bonuses, investment banks have pretty much trebled a trader's basic salary from around one hundred thousand pounds a year to three hundred thousand a year. Bonus rates have been slashed massively and traders now get paid a significantly higher proportion of their bonus in shares.http://www.trade2win.com/knowledge/articles/general_articles/anton-kreil-interview/Read more…
By Gareth Soloway on October 13th, 2010 12:40pm Eastern Time
The markets jumped higher again today as the U.S. Dollar continued its rapid decent. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $118.13, +1.12 (+0.96%). Like a plane in a nose dive, the Dollar is showing no signs of stabilizing. In all fairness, the Federal Reserve has the Dollar doing exactly what it wants. A weaker Dollar creates a fake wealth effect as equities and commodities move higher to compensate. In theory, if the Dollar drops 10%, stocks should go up 10% to maintain their balance and real value. The general trusting public will see this as an increase in wealth, spending more, buying more, but in real terms they have gained nothing. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $22.36, -0.06 (-0.27%). The Dollar is not far off the 2009 November lows and may have its sights set on that double bottom. Long term, expect it to be far lower.
As any educated investor must realize, the U.S. Dollars drop is not going unnoticed by other countries. Many leading powers are racing to devalue their currency faster than the U.S. The idea behind this is the cheaper the currency of any country, relative to its neighbors, the cheaper that countries goods will be for export. If exports rise, jobs increase. This is known as a currency war. We have seen Japan intervene and rhetoric with China explode. This path of racing to devalue one's currency is treacherous. One wrong move and currencies all over the world could collapse, much like Lehman did and other financial companies almost did in the snow ball effect. The major difference would be, the government was able to intervene with the financial firms. In a currency collapse, no government will be able to stop it. In the short term the U.S is playing a game of chicken as it relies on China and other countries to buy its debt thus infusing money into the system. However, as the Federal Reserve drops the Dollar day after day, countries like China are threatening to cease their hungry nature for U.S debt. This is exactly why the Federal Reserve is now forced to buy treasuries. They must make up for the lost demand from other countries as they piss them off by killing the Dollar. Bottom line is this, should other countries stop buying the U.S debt totally, the Federal Reserve would never be able to handle the impact. This is a game of chicken. Who will swerve first?
Also, this QE2 (quantitative easing two) is a total joke. This is the ponzi scheme of all ponzi schemes. The Federal Reserve is buying their own debt. Granted, technically they are not part of the government but let's be realistic here, they work together and it all comes out of the same pot in the end. The Federal Reserve is giving the American public fake statements much like Bernie Madoff did to his poor investors. They are paying one credit card off with another and paying that one off with an other as well. In addition, in their basement they are running printing presses 24 hours a day, diluting each hard working Americans savings and earnings. Mark this article folks, history will show this to be the biggest ponzi scheme ever. It will cause a melt down in the global system that makes the financial collapse look like a rain drop in the lake.
Even if the printing of trillions of Dollars by the Federal Reserve does somehow restart the jobs market which is unlikely, the greater fear must be the next bubble forming. Treasuries and currencies. If the economy does recover, inflation will spike massively, commodities will soar and the buying power of the U.S. consumer will shrink in a huge way. The Federal Reserve is hoping the public is trusting enough to believe they will then handle the inflation correctly. However, not once in history has the Federal Reserve been ahead of the curve in handling any major issue. Just think of all those baby boomers on fixed incomes when the Dollar is worth half of what it was. The Federal Reserve is playing a game here that is probably the most dangerous ever played. Unfortunately, we, the people will pay the price. To get market guidance, swing trades and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
#1 Rated
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a unique way to trade Candlesticks in 212 pages full of examples, graphs and charts. It is a simple and easy to use method to trade candlesticks created by Sokyu Honma in the 18th century in Japan. His method, today forgotten, is simpler, easier to use and more powerful than most other candlestick trading techniques.
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By Nicholas Santiago on October 8th, 2010 3:55pm Eastern Time
The same game gets played again ahead of another long holiday weekend. The U.S Dollar Index drops and the stock market rejoices over losing 91,000 jobs in September. It is all about the U.S. Dollar as the dollar continues to decline on a daily basis. When the dollar declines the markets inflate and trade higher. When you see that most commodities and assets are denominated in the U.S. Dollar what have you really gained from this rally? Most retirees and people that are fed up with the stock market games have lost 12.0 percent of their purchasing power in the dollar. So once again this economy will suffer at the hands of the inflation creators. I've said it before and I shall say it again, this won't end pretty. Oh, I forgot the Dow Jones Industrial Average will trade above 11,000 again though. If that is any consolation.
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