It is very difficult to predict what the US Federal Reserve Committee will do today at 2.15pm EST/10.15pm Dubai time, Wed Sept 21, 2011.
Let me explain....The Fed will meet tonight and depending on what they SAY, either the market will sink down or rise up with a strong rally. However, no one knows. If they throw more money at the banks to help them, the mass market will be very unhappy for spending taxpayers money to help the investment bankers while politicians will lose their seats and the US debt situation will get more worse.
On the other hand, if the Govt does not throw more money, the joblessness will continue to increase, banks will continue to close and the global economic crisis (read depression) will get even more worse despite zero interest rates, because banks will be unable to lend to businesses causing manufacturing and trade to decline.
The US economy is hence stuck between a rock and hard place!
1. However, some interesting news today,just out from Bank of England that they are throwing more money. This makes me believe that USA might throw more money as well. This will make the situation less worse and give stocks a boost for a few days or weeks. However, I am not too sure if they will throw money in US or not but if England has done it, then it is more likely after hearing this news that US might. I have been uncertain and am 50:50 but this news makes me tilt more towards the reality that in politics, politicians will do what gets them the votes not what is best for the country!
Bank of England Hints Move to More Stimulus
By ROBERT BARR
London (AP) -- The Bank of England appears to be gearing up
to pump billions more into the British economy to stimulate a
faltering recovery, minutes to its last rate-setting meeting
suggested Wednesday.
Though American economist Adam Posen was alone among the
nine members to vote in favor of resuming asset purchases,
"most members" agreed that the case for more stimulus had
strengthened in the past month, according to the minutes of the
September meeting of the Monetary Policy Committee.
"For some members, a continuation of the conditions seen
over the past month would probably be sufficient to justify an
expansion of the asset purchase program at a subsequent
meeting," the minutes said.
All nine rate-setters also voted to keep the main interest
rate unchanged at the record low of 0.5 percent.
2. Some major corporations have lost faith in the European banking system.
Since yesterday, two mega corporations have moved billions of dollars from the French banks and deposited it straight with the European Central Bank thus bypassing the risk of closure or bankruptcy of French banks, since the Govt will be unable to help the banks, which are in reality, a business with a social cause.
What this means is that even European companies are not willing to keep deposits with their own European banks which indicates that the bad situation is about to get much much worse.
Lloyd's of London Pulls Deposits From Euro Banks on Debt Crisis
By Kevin Crowley
Sept. 21 (Bloomberg) -- Lloyd's of London, the world's
oldest insurance market, has pulled deposits from European bank
on concerns governments may be unable to support lenders in a
worsening debt crisis, Finance Director Luke Savage said.
"There are a lot of banks who, because of the uncertainty
around Europe, the market has stopped using to place deposits
with," Savage said today in a telephone interview. "If you're
worried the government itself might be at risk, then you're
certainly worried the banks could be taken down with them."
European banks are trying to reassure investors and
customers they have enough capital to withstand a default by
Greece and slowing economic growth caused by governments'
austerity measures. Siemens AG, European's biggest engineering
company, withdrew short-term deposits from Societe Generale SA,
France's second-largest bank, in July, a person with knowledge
of the matter said yesterday.
Lloyd's, which holds about a third of its 2.5 billion
pounds of central assets in cash, has stopped depositing money
with some banks in Europe's peripheral economies, Savage said.
Siemens Deposits More Than 500 Million Euros With ECB, FT Says
By Robert Fenner
Sept. 20 (Bloomberg) -- Siemens AG deposited more than 500
million euros ($681 million) with the European Central Bank
after withdrawing the funds from a French lender two weeks ago,
the Financial Times reported.
The money was moved amid concern with the financial health
of the unidentified French lender and higher interest rates paid
by the European Central Bank, the Financial Times said, citing
an unidentified person with direct knowledge of the matter. The
Munich-based engineering company has between 4 billion euros and
6 billion euros on one-week deposit at the ECB, the FT said.
3. What to do in such a scenario? Where to invest and stay safe?
Safety is not as safe as it used to be!
All equity markets and most real estate markets including most bonds are severely down in the past couple of months.
We can blame it on high oil prices - which no one talks about - failing banks, declining real estate prices, joblessness, extremely weak equity markets or on Sun, Moon or God, but the fact is that most investment values are down, except for accounts managed by me!.
Major corporations such as Lehman, Bear Stearns, Merrill Lynch, 500 banks in USA, hundreds more in Europe have been shut down, hotels and airlines are in big trouble, Starbucks is closing stores, while Citbank and other major Top 10 banks have seen their stocks decline 80 to 90% or more and have been bailed out and are on life support. With no lending, the income of banks is under tremendous pressure., The fraud in trading departments at SocGen and UBS indicates that everything goes in this pressure environment while the US Govt chases investors and banks who assisted US citizens and residents to evade taxes. Thousands of Americans have come out to confess and the number is a staggerring 50,000 US citizens who have admitted to the US Govt voluntarily that they were helped by major banks in evasion of taxes under the amnesty scheme that ended in Aug 2011. HSBC, Credit Suisses and UBS have already settled with US Govt by paying hundreds of millions of dollars in fines and now 8 more banks are under grand jury investigation all from Europe, as announced yesterday.
Investors have lost money in all kind of assets and this makes them relucatnt to invest in anything else. Aside from banks in Brazil, China, India, Australia and Canada, all other countries due to their involvement with US or Europe business or trade are in serious trouble indicated by their stock values.
As on date, the asset allocation to follow should be:
1. Convert 10 to 20% of USD assets into AUD and keep in bonds or deposit at close to 6%. AUD has declined froom 1.10 to 1.02 level and will rise to 1.10 again in the coming months.
2. Invest in AAA rated bond from Singapore which has risen from USD 102 in Jan 2011 to USD 109 as on date named Temasek Financial.
3. Invest in selective Indian and Chinese companies whose bond values are attractive but should be cash rich
4. Stay short in any stock market worldwide or stay out. Can invest in dividend paying stocks selectively.
5. Invest in gold and silver in a selective manner on an average price basis weekly. If gold has risen for last ten years, then it will continue to rise in the future too.
6. Even CAD is great but lacks investment options. Canadian banks are good stocks to buy for the long term.
7. Stay away from INR and INR products as it will decline and remain volatile since Indian economy and real estate will go down in the next two years.
8. Stay away from anything related to European or American financial companies. Better still, short them.
9. Commodities will remain volatile but will continue to rise over next 1-2 years.
10. Keep lots of cash, because it cannot decline in value and provides opportunity to buy when a great opportunity presents in this crisis.
Some interesting bonds to consider as on date:
1. Evergrande Real Estate Jan 2015. Todays price of USD 88 yields 18% in USD from China.
2. ICICI Bank India Nov 20 is down to USD 97 from USD 104 and yields 6.10%
3. Bank of India Feb 21, is down from 109 to USD 101 and yields 5.95%
4. NTPC India July 21 is down from USD 106 to USD 101 and yields 5.50%
5. Indian Oil Aug 21 is down from USD 105 to USD 100.50 and yields 5.50%
6. Vedanta Resources Jul 2018 is down from USD 114 to USD 101.50 and yields 9.15%
7. Woori Bank from Korea Apr 21 is down from USD 107.25 to USD 101.75 and yields 5.60%
8. Rep of Sri Lanka Jul 21 is down from 105 to USD 102 and yields 5.95%
9. Rep. of Vietnam Jan 20 is down from USD 107 to USD 105 and yields 6%
10. Temasek Financial, from Govt of Singapore is AAA rated is down from USD 111 to USD 109 and will not decline further and yields 3%. I see this bond rising to USD 115 in the next 6 to 12 months.
There are not many other ideas at this time but Abu Dhabi bonds have indeed risen due to their safety status when compared to Europe and others.
4.
Do read the report below as to how 8 additional banks (aside from HSBC, Credit Suisse and UBS) have been under grand jury investigation who helped Americans to evade taxes and break US laws.
to pump billions more into the British economy to stimulate a
faltering recovery, minutes to its last rate-setting meeting
suggested Wednesday.
Though American economist Adam Posen was alone among the
nine members to vote in favor of resuming asset purchases,
"most members" agreed that the case for more stimulus had
strengthened in the past month, according to the minutes of the
September meeting of the Monetary Policy Committee.
"For some members, a continuation of the conditions seen
over the past month would probably be sufficient to justify an
expansion of the asset purchase program at a subsequent
meeting," the minutes said.
All nine rate-setters also voted to keep the main interest
rate unchanged at the record low of 0.5 percent.
2. Some major corporations have lost faith in the European banking system.
Since yesterday, two mega corporations have moved billions of dollars from the French banks and deposited it straight with the European Central Bank thus bypassing the risk of closure or bankruptcy of French banks, since the Govt will be unable to help the banks, which are in reality, a business with a social cause.
What this means is that even European companies are not willing to keep deposits with their own European banks which indicates that the bad situation is about to get much much worse.
Lloyd's of London Pulls Deposits From Euro Banks on Debt Crisis
By Kevin Crowley
Sept. 21 (Bloomberg) -- Lloyd's of London, the world's
oldest insurance market, has pulled deposits from European bank
on concerns governments may be unable to support lenders in a
worsening debt crisis, Finance Director Luke Savage said.
"There are a lot of banks who, because of the uncertainty
around Europe, the market has stopped using to place deposits
with," Savage said today in a telephone interview. "If you're
worried the government itself might be at risk, then you're
certainly worried the banks could be taken down with them."
European banks are trying to reassure investors and
customers they have enough capital to withstand a default by
Greece and slowing economic growth caused by governments'
austerity measures. Siemens AG, European's biggest engineering
company, withdrew short-term deposits from Societe Generale SA,
France's second-largest bank, in July, a person with knowledge
of the matter said yesterday.
Lloyd's, which holds about a third of its 2.5 billion
pounds of central assets in cash, has stopped depositing money
with some banks in Europe's peripheral economies, Savage said.
Siemens Deposits More Than 500 Million Euros With ECB, FT Says
By Robert Fenner
Sept. 20 (Bloomberg) -- Siemens AG deposited more than 500
million euros ($681 million) with the European Central Bank
after withdrawing the funds from a French lender two weeks ago,
the Financial Times reported.
The money was moved amid concern with the financial health
of the unidentified French lender and higher interest rates paid
by the European Central Bank, the Financial Times said, citing
an unidentified person with direct knowledge of the matter. The
Munich-based engineering company has between 4 billion euros and
6 billion euros on one-week deposit at the ECB, the FT said.
3. What to do in such a scenario? Where to invest and stay safe?
Safety is not as safe as it used to be!
All equity markets and most real estate markets including most bonds are severely down in the past couple of months.
We can blame it on high oil prices - which no one talks about - failing banks, declining real estate prices, joblessness, extremely weak equity markets or on Sun, Moon or God, but the fact is that most investment values are down, except for accounts managed by me!.
Major corporations such as Lehman, Bear Stearns, Merrill Lynch, 500 banks in USA, hundreds more in Europe have been shut down, hotels and airlines are in big trouble, Starbucks is closing stores, while Citbank and other major Top 10 banks have seen their stocks decline 80 to 90% or more and have been bailed out and are on life support. With no lending, the income of banks is under tremendous pressure., The fraud in trading departments at SocGen and UBS indicates that everything goes in this pressure environment while the US Govt chases investors and banks who assisted US citizens and residents to evade taxes. Thousands of Americans have come out to confess and the number is a staggerring 50,000 US citizens who have admitted to the US Govt voluntarily that they were helped by major banks in evasion of taxes under the amnesty scheme that ended in Aug 2011. HSBC, Credit Suisses and UBS have already settled with US Govt by paying hundreds of millions of dollars in fines and now 8 more banks are under grand jury investigation all from Europe, as announced yesterday.
Investors have lost money in all kind of assets and this makes them relucatnt to invest in anything else. Aside from banks in Brazil, China, India, Australia and Canada, all other countries due to their involvement with US or Europe business or trade are in serious trouble indicated by their stock values.
As on date, the asset allocation to follow should be:
1. Convert 10 to 20% of USD assets into AUD and keep in bonds or deposit at close to 6%. AUD has declined froom 1.10 to 1.02 level and will rise to 1.10 again in the coming months.
2. Invest in AAA rated bond from Singapore which has risen from USD 102 in Jan 2011 to USD 109 as on date named Temasek Financial.
3. Invest in selective Indian and Chinese companies whose bond values are attractive but should be cash rich
4. Stay short in any stock market worldwide or stay out. Can invest in dividend paying stocks selectively.
5. Invest in gold and silver in a selective manner on an average price basis weekly. If gold has risen for last ten years, then it will continue to rise in the future too.
6. Even CAD is great but lacks investment options. Canadian banks are good stocks to buy for the long term.
7. Stay away from INR and INR products as it will decline and remain volatile since Indian economy and real estate will go down in the next two years.
8. Stay away from anything related to European or American financial companies. Better still, short them.
9. Commodities will remain volatile but will continue to rise over next 1-2 years.
10. Keep lots of cash, because it cannot decline in value and provides opportunity to buy when a great opportunity presents in this crisis.
Some interesting bonds to consider as on date:
1. Evergrande Real Estate Jan 2015. Todays price of USD 88 yields 18% in USD from China.
2. ICICI Bank India Nov 20 is down to USD 97 from USD 104 and yields 6.10%
3. Bank of India Feb 21, is down from 109 to USD 101 and yields 5.95%
4. NTPC India July 21 is down from USD 106 to USD 101 and yields 5.50%
5. Indian Oil Aug 21 is down from USD 105 to USD 100.50 and yields 5.50%
6. Vedanta Resources Jul 2018 is down from USD 114 to USD 101.50 and yields 9.15%
7. Woori Bank from Korea Apr 21 is down from USD 107.25 to USD 101.75 and yields 5.60%
8. Rep of Sri Lanka Jul 21 is down from 105 to USD 102 and yields 5.95%
9. Rep. of Vietnam Jan 20 is down from USD 107 to USD 105 and yields 6%
10. Temasek Financial, from Govt of Singapore is AAA rated is down from USD 111 to USD 109 and will not decline further and yields 3%. I see this bond rising to USD 115 in the next 6 to 12 months.
There are not many other ideas at this time but Abu Dhabi bonds have indeed risen due to their safety status when compared to Europe and others.
4.
Do read the report below as to how 8 additional banks (aside from HSBC, Credit Suisse and UBS) have been under grand jury investigation who helped Americans to evade taxes and break US laws.