Tuesday March 9, 2010 - 14:19:46 GMT
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Black Swan Capital - www.blackswantrading.com
European Mother Funders
Yuan Faces Pressure for Appreciation on China's Interest-Rate Gap, Yi Says (Bloomberg)
LONDON, March 9 (Reuters) - Britain's goods trade deficitwith the rest of the world unexpectedly widened in January to its biggest since August 2008, raising further concerns about the strength of the country's broader economic recovery.
The Office for National Statistics said on Tuesday that after the sharpest drop in exports in over three years, Britain's goods trade gap widened to 7.987 billion pounds ($11.97 billion) from 7.010 billion in December, and well above the 7 billion forecast by economists.
JOHANNESBURG, March 9 (Reuters) - Devaluing the rand would be a "very short-sighted" move for South Africa to make, International Monetary Fund (IMF) managing director Dominique Strauss-Kahn said on Tuesday.
Local union federation COSATU, an ally of the ruling ANC, has called on the central bank to widen its inflation targeting mandate and wants a much weaker rand to help boost local industries and create jobs.
â€śIf the euro could overshoot fair value of 1.23 by some 22 percent, why canâ€™t it undershoot it by some 22 percent?â€ť
Erik Nielsen, Goldman Sachs
FX Trading â€“ European Mother Funders (EMF)
You probably read about it already; maybe you didnâ€™t ...
Being proposed is a European Monetary Fund (EMF) -- similar to the International Monetary Fund -- that could step in and bail out Eurozone countries facing troubled fiscal situations.
Sound good? [Chart not available in text format.]
Maybe good enough to stem some of the euroâ€™s fall ... in the very short term, but itâ€™s certainly not an ideal solution to the difficulties pestering Eurozone members and global investors.
Most obviously, it could set a bad precedent. Maybe the term moral hazard comes to mind.
If the mother funders bail out Greece, can they just wring out their mops, kick their feet up and retire with some nice Bordeaux? Doubtful, because theyâ€™ll be called on to clean up after ... uhhhh ... Portugal? Spain? Italy? ...?
Maybe this is simply a gesture to help restore sentiment and confidence in the monetary system. Here is Italyâ€™s President, Giorgio Napolitano, commenting on the whole situation: â€śThere's an awareness that our common arsenal lacks the tools to prevent and efficiently control these crises when vulnerable countries are attacked.â€ť
Until now the euro hasnâ€™t been tested, the system hasnâ€™t been pressured. Though still an outlying possibility, there are legitimate fears that a euro break-up could come from all this. Either way, they need something to keep the one-size-fits-all system together.
After all the scrubbing is done to restore fiscal disasters in the Zone, additional blemishes could, and likely will, be uncovered. Germany, an important member in deciding what measures must and can be taken to fix things, is currently playing nice.
But their compassion and cooperation will be short-lived if solutions morph into real obstacles for the motherland.
Right now the Mother Funding idea is being met with mixed feelings. Some say, â€śNo way! Can it now.â€ť Others seem to think itâ€™s aimed in the right direction.
A big argument addresses the acuity of an EMF mission â€“ to help alleviate the fiscal basket cases and restore the common good. But some have pointed out that there are more important elements to be addressed that would go further in solidifying the common good. For instance, addressing the imbalances, getting surplus nations to consume ... rather than keep the pressure on debtor nations to fulfill this task.
As with many of the global actions taken and proposed during what Iâ€™ll dub the â€śBailout Era,â€ť the key, if public funding is deemed necessary, is to keep from restoring a system that can just as easily crumble as the one before it.
For grins, Iâ€™ve modified the Erik Nielsenâ€™s quotable (as included above):
If the ill-planned common currency could be brought into existence to begin with, why canâ€™t it come crashing down and be banished to take its place as monetary history?
John Ross Crooks III
Black Swan Capital
Currencies are another asset class â€¦
David Newman hereâ€¦ â€śInvesting vs. Tradingâ€ť
How many times have you seen pictures of people sitting on the beach with their laptop in hand in those â€śTrade Forex, Commission-Free!â€ť advertisements? â€śOpen an FX account, quit your real job, sit on the beach and get richâ€ť is the implicit message. Itâ€™s ridiculous! But unfortunately that is what sells.
It doesnâ€™t have to be that way. You donâ€™t have to buy into the hype ... and you donâ€™t have to take that much risk in order to get involved in currencies. Trading can be profitable; but it requires extreme focus and discipline. There is another way if you want to â€śinvestâ€ť in currencies.
Investing in currencies for the long haul means using currencies as another asset class in your portfolio. An asset class that will stand along stocks and bonds and hopefully provide some much needed diversification.
There are plenty of low leveraged long-term investment choices available to you so you can make real money in currencies. They are called Currency Exchange Traded Funds (ETFs).
An ETF is a simple straightforward currency product that you can buy and sell in your standard equity brokerage account. Itâ€™s the same as buying any other fund traded on the exchange.We offer recommendations on Currency ETFs in our month Currency Investor newsletter. We donâ€™t recommend trading them; we do recommend investing in them using a long-term buy and hold strategy.
To sum it up: Our monthly Currency Investor newsletter is geared toward newcomers and experienced investors who are looking for a conservative approach to the foreign exchange market, and learning more about how the global economy works.
In plain language we deliver global macroeconomic analysis and actionable ideas geared toward exchange rate fluctuations over time.
Our analysis is comprehensible and our recommendations consist of ETFs, as I said. So donâ€™t get turned off by buzz words like â€śexchange ratesâ€ť or â€śforeign exchangeâ€ť â€“ this investing strategy is as easy to implement as buying and selling stocks.
Plus, at $39 per year itâ€™s a deal youâ€™d be hard-pressed to find anywhere else.
Thorough global analysis plus complete investment guidance ... and all for only $39 per year? You can become a Member of our Currency Investor service at our homepage via credit card or PayPal.
All the best,
Director of Sales and Marketing
Black Swan Capital
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