David Einhorn: It seemed to me if the Federal Reserve was willing to cut interest rates by 75 basis points because some French bank was unwinding a proprietary position when nobody else was around, I knew that that was really where their primary focus was. And as I have watched things since then, nothing has taken me off of that belief.
Recently the Fed’s St. Louis chairman Bullard stated that he will be more comfortable with tapering once CPI has reached a target rate of 2-2.5%. This indicates that the FOMC has no intention of tapering anytime soon. Using the last 20 years as a lesson the only way that the market will be able to sustain numbers relatively close to current levels without the help of the FOMC’s asset purchase program is drastic disruptive innovation on par with the spread of the internet or large scale war.
Both the EUR/USD and the AUS/USD have seen substantial gains following the statement from the Federal Reserve. In the statement the Federal Reserve laid out plans to hold interest rates at or near zero until late 2014. This language was more dovish than the December statement which assured the markets that interest rates would remain close to zero until mid-2013.
The FOMC interest rate and statement will be released at 11:30am CST and the Bernanke press conference will be at 1:15pm CST.
He goes on to explain that just a week before Lehman tanked and was left hung out out dry by the US Treasury (namely Paulson in no uncertain terms), which said they were going to do just that publicly
If both Russia and China, two of the top five global economies, are no longer forced to hold dollars as a means of purchasing oil, the US policy of continually pumping liquidity (printing dollars) may come home to roost in the form of hyper-inflation.
With the Swiss National Bank intervening last year and attempting to set a floor in the EUR/CHF cross at 1.20 the trading community is divided on whether or not the SNB will be successful in holding that floor.
Recently the Federal Reserve’s action to lower the interest rate on dollar denominated swaps shows that the primary goal in Washington is to continue to buy time for the Western banking system. “Kicking the can down the road” has become the strategy in Washington.
Today the world’s major central banks moved, led by the Federal Reserve, to loosen liquidity in the world’s largest banks. Effectively the Federal Reserve cut the rate at which they lend to major financial institutions by .5 percent. This move will allow European banks to raise US dollars at a reduced rate, but does it [...]
The Chinese yuan and it’s lack of appreciation could begin to attract interest in the United States.