InTheMoneyStocks Market Analysis

[InTheMoneyStocks]

Has The Fed come To Their Senses Yet?

We all know that this recent stock market rally that began on August 25th, 2010 has been manufactured by the Federal Reserve Bank and the prospect of QE2(quantitative easing). Since that time the stock market has rallied higher by nearly 13 percent. However, the U.S. Dollar Index has declined by nearly 13.0 percent since it's June 7th, 2010 high. This tell us that quantitative easing has already been going on. If the U.S. Dollar has lost 13 percent and the stock indexes have rallied 13.0 percent what have investors really gained as stocks are denominated in dollar terms? It has really been a zero sum game and many people are hopefully realizing that.

There are several negatives to the 'kill the dollar' policy that the Fed has adopted. The first is that all goods and products that people need will become more expensive. Just look at the price of gasoline, or food? These prices have increased and will continue to increase. Most commodities besides gold and silver are now at all time highs. How can this be a positive for society? What about the retirees or those that are living on fixed incomes? What happens to these people as they see their purchasing power evaporate before their eyes?

Most investors are under the impression that quantitative easing is coming soon. They believe that it has not occurred yet. Are you kidding me? How many bubbles can the United States handle? The last time we saw quantitative easing of this magnitude was in 2001-2007 which caused the greatest credit bubble since the great depression. What is this more powerful artificial prop job going to cause this time? The Fed funds rate(overnight lending rate to the large major banks) has been at zero percent since 2008 and the banks still can't get out of their own way. Bank of America(NYSE:BAC) just hit a new 52 week low today for crying out loud.

Don't people see the damage that is going on? Where did all of the toxic assets go that the banks had on their books? The phony accounting can only work so long before the real problems emerge. Lets not even talk about the government debt and spending that is going on. Who is going to lend a nickel to this country at this rate. America talks about the European debt, meanwhile, we have fifty Greek states of our own. This Fed better come to their senses soon.

Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com

 

[Als]

Re: The Truth Revealed: The Biggest Ponzi Scheme Ever

...... 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.........

...... 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,....

.... 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.......

.......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........
.......
...... The Federal Reserve is playing a game here that is probably the most dangerous ever played. Unfortunately, we, the people will pay the price.......


AGREE !

MY THOUGHTS ARE THE SAME !

BUT USA HAS NO OPTIONS LEFT

 

[daveyc]

Re: Has The Fed come To Their Senses Yet?

I'm with you 100%. There will be a payback at some point for what the fed is doing to the dollar.

 

[InTheMoneyStocks]

A Little Screw You From China To The United States

China struck back today, raising interest rates in a surprise action that shocked the world. The real reason behind this was most likely to strike back and the United States officials like Tim Geithner who have been calling more harshly than ever for China to let their currency float against the U.S Dollar. Treasury Secretary Tim Geithner has been calling China a major currency manipulator. This move by China smacked the Federal Reserve and Government policy of a weak U.S. Dollar right in the face. The Dollar soared today on the back of this China move. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) jumped dramatically today, trading at $22.64, +0.32 (+1.43%).

The big question must be asked. Who is really manipulating their currency? Yes, China ties their currency to the U.S. Dollar to artificially keep it low. However, the policy of the Federal Reserve is to drop the Dollar dramatically, printing money by the trillions and creating a false wealth effect. In reality, it can be argued that the United States is as big a manipulator of its own currency as China. This action by China was a clear shot across the bow of the United States ship. Essentially telling the U.S to back off and watch themselves while proclaiming themselves a big mega power like the U.S.

The SPDR S&P 500 ETF (NYSE:SPY) are trading at $117.38, -1.16 (-0.98%). The Dollars dramatic rise is the only reason the markets are lower. Many in the media will point to International Business Machines Corp. (NYSE:IBM) and Apple Inc. (NASDAQ:AAPL) earnings which were not quite as good as Wall Street had hoped. However, if you look at the futures overnight, they were trading positive, setting up for a flat to slightly higher day on Wall Street until China raised interest rates. The markets are purely a play on the currency right now. The Federal Reserve pushes the Dollar down to keep the markets up but cannot compete with China, at least not today.

Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com

 

[Liquid validity]

Re: A Little Screw You From China To The United States

And so the game of currency tennis goes on
I still think this is the intention for the time being, neither country can really afford to see the others currency fail, so its an ongoing haggling process.

If America can maintain this pattern, it may be enough to improve its defecit situation.
If not - Weimar anyone...

All that ignores the fact that China is not as strong as some assume - how long will its pool of cheap labour last before standing up and demanding more, thats a factor America will certainly be taking into account. Just how well will China fare when average manufacturing wage levels increase is anyones guess, hard to see them exerting the same economic pressure when that occurs.

 

[Black Swan]

Re: A Little Screw You From China To The United States

I think the western meeja have been complicit in stoking up this phoney war, fact, the dollar is a piece of grade a 5hit, it isn't the worlds' reserve currency, it's the worlds' toilet paper..

When the Euro was collapsing, or the Yen, no one called a "currency war", now the US are suffering (ignoring that fact that the BRIC nations are calling foul due to the US mega trillion game of hunt the derivative time bomb, look how much the rupee has appreciated recently), "someone must be wrong!". It can't possibly be their policy of simply creating trillions of the greenback, based on their foreign crusades and the understanding that you can print until everyone else dies in a race to the bottom, and that their stolen oil is the new *gold standard*..

Saddam discovered what happens if you dare think about selling oil in anything bar dollars, Iran nearly suffered the same fate..the USA finally ending its hegmony is going to be very ugly, this is not the usual empire folding, they won't let go..ever..

 

[BlackBison]

Re: A Little Screw You From China To The United States

these huge macro shifts normally take decades or even centuries to play out.. these sensationalist stories about US dollar or economy dying off soon are pretty stupid imo. just ride the coming commodity bull and go with the flow i say

 

[jsc]

Re: A Little Screw You From China To The United States

China was under pressure from all sides to devalue, including Europe and the IMF. They have raised rates to dampen growth in response to global pressure. Note they were told by the IMF that if they want to be taken seriously, they had better start to act more responsibly. G20 summit coming up soon as well.
Both US and China are attempting to avoid an exacerbation of the existing competitive devaluation scenario, as both know this leads to protectionism if not checked, which benefits neither party.
Incidentally, China also abandoned its dollar peg back in June this year.
The dollar has risen as investors closed carry trade positions in riskier assets, as the rate of global expansion for emerging markets is felt, in the short term, to have been dampened by Chinas move, therefore depreciating the nominal value of many high yield but risker plays and making these carry trades unviable. Also the rise in rates in china indirectly implies greater fortitude for US exports.

 

[InTheMoneyStocks]

The Federal Reserve Strikes Back, Crushing The Dollar

Yesterday, the markets had their biggest decline in two months. The reason behind this decline was the surprise move by China, raising interest rates. This caused the Dollar to spike dramatically higher, crushing the U.S. markets. Yesterday was the first day in two months where it did not seem the Federal Reserve was in control of the Dollar, and POMO (Permanent Open Market Operations) did not work.

Today, the Federal Reserve is flexing their monetary muscle as the U.S. Dollar has been slammed back down, negating almost all of the upside yesterday. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $22.39, -0.31 (-1.37%). In tune with a drop in the Dollar, the markets are surging to the upside as well, erasing a majority of the losses from yesterday. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $117.84, +1.11 (+0.95%).

The Federal Reserve is flexing its muscles after China did so yesterday. The currency war that will inevitably end in hardship for the small investor and average American is fully underway. The Federal Reserve wants a weak Dollar, China, who owns a trillion Dollars in U.S. debt, does not. Treasury Secretary Tim Geithner yells at China daily on 'currency manipulation', while China thinks the same of the U.S. Now that the weak Dollar policy (currency manipulation) is in full swing.

Gareth Soloway
Chief Market Strategist

 

[Dentalfloss]

Re: The Federal Reserve Strikes Back, Crushing The Dollar

great stuff..many thanks

 

[Martinghoul]

Re: The Federal Reserve Strikes Back, Crushing The Dollar

IMHO, this is an idiotic post...

 

[oildaytrader]

Re: The Federal Reserve Strikes Back, Crushing The Dollar

The federal reserve are a bunch of thieves owned by thezxionist thieves, and the investment banking scammers.

http://www.usagold.com/federalreserve.html

 

[wackypete2]

Re: The Federal Reserve Strikes Back, Crushing The Dollar

IMHO, this is an idiotic post...

Which part? Both the US and China are vying for the title of #1 manipulator while denying it and accusing the other one. I'd like to hear your comments if you don't agree.

Peter

 

[Liquid validity]

Re: The Federal Reserve Strikes Back, Crushing The Dollar

http://www.marketoracle.co.uk/Article23427.html

Currency tennis

Long term Dollar index:
http://www.chartsrus.com/chart.php?...hartstemp/free/chartind1CRUl.php?ticker=FUTDX

 

[Martinghoul]

Re: The Federal Reserve Strikes Back, Crushing The Dollar

Which part? Both the US and China are vying for the title of #1 manipulator while denying it and accusing the other one. I'd like to hear your comments if you don't agree.

Peter

The part which suggests that today's move in the dollar is "the Federal Reserve flexing their monetary muscle". As to who's the manipulator, that's a silly distinction. Everyone out there does it, but with varying degrees of directness.

 

[forker]

Re: The Federal Reserve Strikes Back, Crushing The Dollar

the reaction to the china news was the usual titty slapping reaction. we might have a short term top in place though. could be good for wide range trading

 

[robster970]

Re: The Federal Reserve Strikes Back, Crushing The Dollar

the reaction to the china news was the usual titty slapping reaction. we might have a short term top in place though. could be good for wide range trading

Chinese economic news out during asian session - you think it might not be as great as peeps are expecting then?

 

[Als]

Re: The Federal Reserve Strikes Back, Crushing The Dollar

Yesterday, the markets had their biggest decline in two months. The reason behind this decline was the surprise move by China, raising interest rates. This caused the Dollar to spike dramatically higher, crushing the U.S. markets. Yesterday was the first day in two months where it did not seem the Federal Reserve was in control of the Dollar, and POMO (Permanent Open Market Operations) did not work.

Today, the Federal Reserve is flexing their monetary muscle as the U.S. Dollar has been slammed back down, negating almost all of the upside yesterday. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $22.39, -0.31 (-1.37%). In tune with a drop in the Dollar, the markets are surging to the upside as well, erasing a majority of the losses from yesterday. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $117.84, +1.11 (+0.95%).

The Federal Reserve is flexing its muscles after China did so yesterday. The currency war that will inevitably end in hardship for the small investor and average American is fully underway. The Federal Reserve wants a weak Dollar, China, who owns a trillion Dollars in U.S. debt, does not. Treasury Secretary Tim Geithner yells at China daily on 'currency manipulation', while China thinks the same of the U.S. Now that the weak Dollar policy (currency manipulation) is in full swing.

Gareth Soloway
Chief Market Strategist

What about european voice?
Does it have any influence?

 

[gooseman]

Re: The Federal Reserve Strikes Back, Crushing The Dollar

Geithner appears to be happy...

 

[jsc]

Re: The Federal Reserve Strikes Back, Crushing The Dollar

Firstly, the FTSE 100 and Dow lost about 0.89%, hardly a big move compared with the 30 August when the Dow (-1.68%) lost almost twice that, a date that falls within the past two months if you feel the timeframe to be relevant.
Secondly, you seem to have failed to factor in, within your brief synopsis, the current inverse relationship between the dollar and the markets, which is all based around the carry trade on the dollar.
China has an inflation problem coupled with lower demand for its exports. It also has high inflows of money coming into the country on an ongoing basis. The renminbi has appreciated over 2% against the dollar since September. The economy is over-heating against a backdrop of weak demand. The US want china to have a stronger currency and the China do not wish to accelerate this process further for the above mentioned reasons, amongst others. Politically, China could get nasty by using its position to hurt US business and jobs or by refusing to co-operate with regards to North Korea or Iran.
In the end it will be universal pressure from the worlds economies, particularly emerging markets that are struggling with China's fixed currency as they enjoy currency appreciation in the normal free market way, that will force China to stop keeping its currency undervalued.