More bank failures to come
24/11/08 09:02
Hi Traders
First I want to thank all the attendees at the Charlotte, NC workshop. It is always a pleasure to share my experiences and trading methods with the group. I hope that the content of the workshop has offered a clear vision and further insight into the FX market. I want to thank Angie Crisp for organizing the workshop and to Greg Crisp for his guest presentation. As you know, Greg has been a student of mine for three years and has become an independant thinking and hhighly successful full time trader. Although he uses my methods and market approach, he succeeded because of the commitment, effort and study he made to the business. All the students show great aptitude for the business and I hope I can continue to be a part of your growth as a trader. The process and pursuit of success in this business will enhance many area's of your life.
The US government has stepped in once again to shore up financial market stability, this time with a joint rescue package from the Treasury, Fed and FDIC for the US' second-largest bank, Citigroup! If you have not done so already, please view the video FDIC chariman posted in the blog, where the undertones suggest further bank failures. Hang on folks!! The government and the bank identified an asset pool of about $306bln worth of distressed real-estate backed loans and securities. Under the plan, the bank would be responsible for the initial $29bn of losses on the portfolio. The Treasury, FDIC and Fed would then take on any additional losses, with the Fed acting as the backstop. Treasury will also provide a $20bln cash injection (in addition to $25bn already issued under TARP) in return for preferred securities in the bank. On the economic front, US President-elect Obama announced a new initiative aimed at creating 2.5mln new jobs, which may act as good intentions but will likely not outweigh the tsunami of job losses to come as the auto industry and other related manufacturing suffer badly in the coming months. The new stimulus package could be in the range of $500bln to $700bln and Congress is expected to have it ready for Obama to sign shortly after his inauguration. Obama will also formally announce his economic team, with Timothy Geithner as Treasury secretary and Lawrence Summers as head of the White House National Economic Council.
First I want to thank all the attendees at the Charlotte, NC workshop. It is always a pleasure to share my experiences and trading methods with the group. I hope that the content of the workshop has offered a clear vision and further insight into the FX market. I want to thank Angie Crisp for organizing the workshop and to Greg Crisp for his guest presentation. As you know, Greg has been a student of mine for three years and has become an independant thinking and hhighly successful full time trader. Although he uses my methods and market approach, he succeeded because of the commitment, effort and study he made to the business. All the students show great aptitude for the business and I hope I can continue to be a part of your growth as a trader. The process and pursuit of success in this business will enhance many area's of your life.
The US government has stepped in once again to shore up financial market stability, this time with a joint rescue package from the Treasury, Fed and FDIC for the US' second-largest bank, Citigroup! If you have not done so already, please view the video FDIC chariman posted in the blog, where the undertones suggest further bank failures. Hang on folks!! The government and the bank identified an asset pool of about $306bln worth of distressed real-estate backed loans and securities. Under the plan, the bank would be responsible for the initial $29bn of losses on the portfolio. The Treasury, FDIC and Fed would then take on any additional losses, with the Fed acting as the backstop. Treasury will also provide a $20bln cash injection (in addition to $25bn already issued under TARP) in return for preferred securities in the bank. On the economic front, US President-elect Obama announced a new initiative aimed at creating 2.5mln new jobs, which may act as good intentions but will likely not outweigh the tsunami of job losses to come as the auto industry and other related manufacturing suffer badly in the coming months. The new stimulus package could be in the range of $500bln to $700bln and Congress is expected to have it ready for Obama to sign shortly after his inauguration. Obama will also formally announce his economic team, with Timothy Geithner as Treasury secretary and Lawrence Summers as head of the White House National Economic Council.
Its possible the dollar can remain firm for now as long as Treasury demand continues, but has experienced some pullback on the news of Citigroup patchwork with taxpayer money. At some point, the taxpayer will really pay, and it will hurt. The announcement of the economic team and the new government rescue plan remove some of the large uncertainties that still weigh on investors and give a better picture of what to expect ahead, although few see the real picture. But the longer-term debate will remain focused on potential changes in the Fed's monetary policy and its effect on the dollar. It's a holiday shortened week in the US with Thanksgiving on Thursday and accordingly there are no data releases on either Thursday or Friday. Ahead today, there are no major data releases. It's a holiday shortened week in the US with Thanksgiving on Thursday and accordingly there are no data releases on either Thursday or Friday. Ahead today, there are no major data releases. I recommend you take caution during Thanksgiving trading hours, because the market will trade thin in already thin trading markets.
EUR: Further IFO declines expected
The German Ifo index released overnight undershot expectations, coming in at 85.8 in November, well below 90.2 in October. This is the lowest since the severe 1992-1993 post unification recession. The current conditions and expectations components also fell sharply to 94.8 and 77.6 respectively. The Expectations Index is now below 80 for the first time in history. It is noted that in light of today's numbers, and with inflation having virtually disappeared and deflation/depression fears now on the rise, its possible the ECB will use its monetary arsenal and cut rates aggressively. Again in the light of today's Ifo numbers, the chance for another cut in December has clearly risen. For Germany itself, the market would appreciate more details of a domestic spending package, even in the context in a Eurozone-wide stimulus plan. It has been widely acknowledged that Germany is in a better position to provide the economic with a fiscal boost and with the US already looking at a second package, a coordinated spending plan within G10 will provide a much-needed boost to the economy. Elsewhere markets will continue to monitor ECB commentary and whether a deeper than expected cut at the ECB's December meeting is possible. IFO often sets the tone for short term trend shifts, but has been shunned today in light of extenuating circumstances in the global markets.
By the way, I have some remaining "Complete FX Courses" under a former brand "AllStarFX", but the material is exactly the same as existing products, just the brand logo is different. We are selling this product for a deep discount at $395 USD +$30 for shipping. The course includes 12 CD's and a large manual. see link for details. http://www.chrislori.com/special-offer.html
Good Luck with your trading and be careful out there!
Chris Lori
CTA
Ref: UBS