Global Markets Get an Early Christmas Present From Fed Reuters | October 13, 2010 | 12:37 PM EDT World stocks hit a six-month high while the dollar weakened Wednesday on expectations that the Federal Reserve will further loosen monetary policy, boosting appetite for risk. Gold [ GCZ0 1371.4 +24.7 (+1.83%) ] surged almost 2 percent to a record above $1,372 an ounce as investors sought protection against a sinking dollar. Other commodities also rose, and oil prices climbed more than 2 percent. Minutes from the Federal Reserve's September meeting Tuesday showed officials discussed the possibility of buying more longer-term U.S. government debt to drive borrowing costs lower and ways to nudge the public into expecting higher levels of inflation in the future to spur spending. "The Fed minutes certainly induced a rally right across the board," said Peter Cardillo, chief market economist at Avalon Partners in New York. "We are seeing the dollar lower, gold and oil prices higher. That is adding risk flavor to the market." A number of strong corporate results also bolstered stock markets, including an upbeat fourth-quarter sales and margins forecast by Intel [ INTC 19.41 -0.36 (-1.82%) ]. MSCI's benchmark All-Country World equity index rose more than 1 percent on the day to hit its highest level since mid-April. The Dow Jones industrial average [ .DJIA 11137.56 +117.16 (+1.06%) ] gained near 11,109.52, while the Standard & Poor's 500 Index [ .SPX 1182.44 +12.67 (+1.08%) ] rose toward 1,178.72. The Nasdaq Composite Index [ COMP 2448.59 +30.67 (+1.27%) ] was last up nearly 1 percent. The FTSEurofirst 300 index of top European shares [ FTSE 778.52 +23.53 (+3.12%) ] jumped to a three-week high. The prospect of a second round of U.S. quantitative easing, which equates to printing more money, pushed the dollar toward an eight-month low against the euro. Dollar losses were limited, however, after the euro failed again to hold above the key psychological $1.40 mark. The dollar's recovery accelerated after automatic buy orders were triggered, traders said. The euro [ EUR=X 1.3964 +0.0050 (+0.36%) ] was last around $1.3970. It had earlier risen as high as $1.4002 on trading platform EBS, not far from its eight-month high of $1.4030 hit last week. The dollar also posted losses against a basket of major trading-partner currencies, with the U.S. Dollar Index down on the day [ .DXY 77.068 -0.295 (-0.38%) ]. Against the Japanese yen, the greenback [ JPY=X 81.84 +0.06 (+0.07%) ] dipped near 81.75 yen. Gold [ GCZ0 1371.4 +24.7 (+1.83%) ] hit a record high at $1,372.20 an ounce as the dollar weakened globally. Gold prices have rallied nearly 25 percent so far this year as investors turned to the metal as a haven from the effects of an increasingly loose monetary policy in the United States. "Because we are in a world of quantitative easing in the developed economies, and as QE is almost synonymous with competitive devaluation ... gold and the precious metals (are) taking on the function of an alternative currency," said Ashok Shah, chief investment officer at London and Capital. U.S. crude oil rose more than 2 percent after data showed China, which surpassed the United States as the world's biggest energy user, set a record 35 percent increase in September crude oil imports from a year earlier. U.S. Treasury prices fell on prospects the Fed could buy long-dated bonds in a second round of monetary policy easing. German government bond prices fell after European Central Bank Governing Council member Axel Weber said Europe's economy was on the road to recovery, and that the bank could raise interest rates even as it kept support measures in place. The bund future fell 64 ticks. Weber's comments highlighted policy differences in the United States and the euro zone, supporting the euro. "In the G4 space, the ECB is the only central bank that is talking of an exit policy and that is helping the euro," said Ankita Dudani, G10 currency strategist at RBS.
Things are very interconnected I don't really now what Fed is thinking but with current government policy it's impossible to reach 5% unemployment no matter how much money you print 5% unemployment will require to stop globalization or to be on one level with chinese labour What Fed does now is just a copy of what they did in early 2008 official CPI was 4%. this is what they dream about now then we got 150 oil and economy crashed In 6 months we will get another infaltionary recession and I bet Bernanke will have huge chances to be fired
this is a great read. http://globaleconomicanalysis.blogspot.com/2010/10/drunken-horses-and-drunken-horses-asses.html
Yes it is only 22 points away. A very tough 22 points. I don't think it will get there by friday morning open.
The rest of the world doesn't necessarily share the economic uncertainly of the US ( Britain, Spain, Greece perhaps ). For example, in Canada there is no need to print more money. The other day I saw a forecast the Canadian dollar will be worth $1.15 US by next year. The Canadian government has been trying to prevent this but they may lose that battle. With all these governments trying to devalue their currency it is obvious why Gold is going up. Those on this site predicting a large drop in Gold soon need a lesson in economics. I think $1500 Gold is a virtual certainty by the summer if not within weeks. It is possible to invest in companies who are mostly resiliant to US hardships. Meanwhile, I still see US companies like Intel and JP Morgan continueing to make large profits. The US economy simply cannot be as bad as some would have you believe. If the US economy was stronger the profits would be massive, so investors are forecasting a recovery and they want to own these profitable companies. If they are wrong there is plenty of time to back out there will be no 2008 style crash there just aren't many investors out there willing to relive a panic sell off and then watch helplessly as their investments are bought up at bargain prices by smart money.
Your calls in this thread are brutal; I'd almost expect the 22 points then except reality is its option expiry week ( minor sell off is usual now ) and the index rarely moves 22 points on one day. Imagine all the shit that has to happen now to get to 1000 as you predicted. Regardless of whether 1000 or 1200 arrives first, 1000 is going to take a long time ( if ever ) whereas 1200 might hit next week. I don't believe your claim of small loss on your short, shorting the index and being so wrong had to be costly. Of course, I suspect you msy be a paper trader in which case you got off cheap !!! I wouldn't bring up your calls but you were clearly arrogant from the start and couldn't read a chart to save your life. This whole exercise might end up being an excellent lesson moving forward.
Shorting the index? Post the link where I say I shorted the index. I never would short the index. Sorry, you can make up crap if you want to fit your agenda, but the only trade I made on this thread was to sell Oct 1200 calls. And I will end up with a small profit if they expire worthless. yeah managing risk and eeking out a small profit despite having the S&P move 74 points against me is brutal. lol.
If C$ =$1.15 US Canadian economy will die the next day I bet when C$=$1.05US Bank of Canada will start printing