Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: BubbaFred who wrote (49558)	5/6/2004 1:24:12 AM
From: BubbaFred	Read Replies (1) \| Respond to of 74559

Daily Forex Commentary By Jack Crooks Key News UK mortgage borrowing rose at its highest rate since records began 10 years ago in March, while a growing number of retailers boasted of rising sales in April, indicating that two Bank of England rate rises since November have done little to curb the consumer boom. (FT) German unemployment is still rising; in April, the seasonally adjusted unemployment rate stood at 10.5 percent, up from 10.4 percent in March. (BBC) Chinese mainland banks granted the steel industry credit lines totaling 261.7 billion yuan in 2003, according to the Financial Market Department under the People's Bank of China or the central bank. (The Standard) Eighty-one percent of Japan's foreign exchange reserves were invested in US treasury bonds, Hong Kong's investment ratio was 49 percent, and China, with the second-largest FX reserves in the world, had only 37 percent of its money in US treasuries. Taking into account the US$45 billion used for capital injections into two state-owned banks, China's ratio could even be lower. (The Standard) Key reports due Wednesday (WSJ): 10 am April Non-Manufacturing ISM. Consensus: 65.0. Previous: 65.8. Quotable: "Without faith in his own judgment no man can go very far in this game. That is about all I have learned - to study general conditions, to take a position and stick to it." - Larry Livingston (Jesse Livermore), Reminiscences of a Stock Operator FX Trading: We think we know the general conditions. The Fed knows the specific conditions. They know there is an enormous amount of leverage in the bond market, so they decided to take a pass on Tuesday. But make no mistake; the ground work has been laid for a hike. Bond trades have been properly warned. If we see a blowout jobs number on Friday, we're probably looking at 3-4 points clipped off the 30-year pretty quickly. And we would suspect the dollar would retrace much of the gains given up over the past three days. The dollar was mostly lower again on Wednesday. The pound is flat, after a surge on Tuesday. A rate hike from the Bank of England (expected Thursday) is a done deal, according to traders. The metals caught a little break from the China worries on the falling dollar over the past few days. But the China problems - or more accurately, the potential for problems (read bust) - haven't gone away. In fact, The Standard newspaper in Hong Kong carried this story on Wednesday, "Mainland bankers fear loan backlash": "As much as two thirds of new funds poured into the steel industry last year, or about 90 billion yuan (HK$84.83 billion), actually came from bank loans," according to Wang Xiaoguang, a researcher with the Institute of Economy under the State Development and Reform Commission. "If construction stops outright, there appears to be little chance that the newly curbed companies could service the debt. "The problem may well be bigger than that, and it illustrates the dilemma that Premier Wen Jiabao faces in trying to cool China's economy without killing it." "In the first two months of this year, investment in the steel industry jumped by 172.6 percent year-on-year, according to official statistics. There were signs that investment accelerated in some regions as local officials were trying to catch 'the last train' before Beijing shut the economy down." Those are general conditions that will continue to weigh on the metals. Until this situation is resolved, one way or the other, we believe there is limited upside. A look at the dollar index chart shows there could be more damage ahead, but Friday's jobs report will probably be the key event. Jack Crooks has actively traded in global equity, fixed income, commodity, and currency markets for more than 20 years. He is President of Black Swan Capital, a currency advisory firm - BlackSwanTrading.com. atimes.com