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The LUFCwaffe
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Joined: 02 Jan 2007
Posts: 1858
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 Posted: Tue Nov 04, 2008 10:59 pm Post subject: |
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US elections are generally a source of good times in the markets, no matter who wins.....as is the sentimental Santa Claus rally in the lead up to Christmas.
January may be different, but hopefully all the cards will be on the table by then, and we'll know where the world stands
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accajacca
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Joined: 18 Dec 2007
Posts: 1322
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| Posted: Thu Nov 06, 2008 11:46 am Post subject: |
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| accajacca wrote: |
i'm not trading stocks or index futures at the moment, purely because i think we need to re-test the lows before we can really go higher. i might be wrong, but i think it's too early to just load the boat.
i'm making more money from trading cable at the moment than from my salary  doubt it will last, but i'm definitely feeling the benfit of concentrating on one market. |
market not looking too clever and neither is my trading account, having done 50 ticks on cable this morning  reminder to self: DO NOT TRADE BIG NEWS DAYS.
rates news out shortly, cable a bit skittish, market expecting 0.5% cut, same in eurozone. whatever happens i will not be punting it 'cause i'm feeling sore from this morning  i'll wade back in this afternoon when things have calmed down... |
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Darren
Group Performer
Joined: 11 May 2006
Posts: 2131
Location: Cheltenham
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| Posted: Thu Nov 06, 2008 12:12 pm Post subject: |
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Sheesh, 1.5% seems excessive to me and screams of panic, regardless of the reasoning.
1% would have bounced the markets in the short-term, but this will take people a while to digest. Are we as screwed as this rate cut would suggest? |
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accajacca
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Joined: 18 Dec 2007
Posts: 1322
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| Posted: Thu Nov 06, 2008 4:16 pm Post subject: |
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| Darren wrote: | Sheesh, 1.5% seems excessive to me and screams of panic, regardless of the reasoning.
1% would have bounced the markets in the short-term, but this will take people a while to digest. Are we as screwed as this rate cut would suggest? |
market seems to think so. knew this sell off was coming. bloody knew it. infuriating. |
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Darren
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Joined: 11 May 2006
Posts: 2131
Location: Cheltenham
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| Posted: Thu Nov 06, 2008 4:35 pm Post subject: |
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| accajacca wrote: | | Darren wrote: | Sheesh, 1.5% seems excessive to me and screams of panic, regardless of the reasoning.
1% would have bounced the markets in the short-term, but this will take people a while to digest. Are we as screwed as this rate cut would suggest? |
market seems to think so. knew this sell off was coming. bloody knew it. infuriating. |
Put it into context, mate.....we are now where we were at the end of last week. That is nothing new.
No-one points out the 6 positive days before yesterday. Short-term pain, long-term gain  |
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RightJudgeIam
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Joined: 13 Oct 2006
Posts: 4692
Location: Fuengirola, Spain
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| Posted: Thu Nov 06, 2008 4:44 pm Post subject: |
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is it correct that the majority of mortgage holders will not benefit from todays' interest rate cut? I understand that most rates are linked to LIBOR rather than the BoE base rate and as LIBOR is not coming down much then rates wont come down.
Not that it affects me as I dont have a mortgage, just I am interested. Can any more knowledgable forumites expand? If mortgages are not going to be affected by base rate cuts then what's the point?
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Darren
Group Performer
Joined: 11 May 2006
Posts: 2131
Location: Cheltenham
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| Posted: Thu Nov 06, 2008 4:57 pm Post subject: |
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| RightJudgeIam wrote: | is it correct that the majority of mortgage holders will not benefit from todays' interest rate cut? I understand that most rates are linked to LIBOR rather than the BoE base rate and as LIBOR is not coming down much then rates wont come down.
Not that it affects me as I dont have a mortgage, just I am interested. Can any more knowledgable forumites expand? If mortgages are not going to be affected by base rate cuts then what's the point?
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The theory behind reducing base rates is to reduce LIBOR, the cost of lending between banks. If the banks won't lend to each other because they don;t trust each other, then that rate will remain high because a premium is put on the cost of borrowing.
It will take the banks trusting each other again to push LIBOR down, which in turn will then be passed on to customers. The only way you benefit now is if you have a tracker rate mortgage.
All that said, this rate cut is all about trying to get people spending rather than saving, in my opinion. With Christmas coming up, the economy needs people spending, and in particular good retail figures after Quarter 4. |
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dogsaver
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Joined: 21 Feb 2006
Posts: 2134
Location: enniskillen n.ireland
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| Posted: Thu Nov 06, 2008 11:35 pm Post subject: |
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| Darren wrote: | | RightJudgeIam wrote: | is it correct that the majority of mortgage holders will not benefit from todays' interest rate cut? I understand that most rates are linked to LIBOR rather than the BoE base rate and as LIBOR is not coming down much then rates wont come down.
Not that it affects me as I dont have a mortgage, just I am interested. Can any more knowledgable forumites expand? If mortgages are not going to be affected by base rate cuts then what's the point?
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The theory behind reducing base rates is to reduce LIBOR, the cost of lending between banks. If the banks won't lend to each other because they don;t trust each other, then that rate will remain high because a premium is put on the cost of borrowing.
It will take the banks trusting each other again to push LIBOR down, which in turn will then be passed on to customers. The only way you benefit now is if you have a tracker rate mortgage.
All that said, this rate cut is all about trying to get people spending rather than saving, in my opinion. With Christmas coming up, the economy needs people spending, and in particular good retail figures after Quarter 4. |
well no one trusts them anymore so why should they trust each other  |
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jennywales
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Joined: 22 Apr 2006
Posts: 10205
Location: Wales
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| Posted: Fri Nov 07, 2008 8:14 am Post subject: |
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I may be being either uneducated or usophisticated here, but if the cut in interest rates won't give any benefit to mortgage holders, and is intended to encourage people to spend - presumably also encouraging them to get into more debt - will it not put us back where we started? As I recall one of the triggers for the downturn/crash/credit crunch was high levels of personal debt that the banks then found they couldn't service.....
What would happen if interest rates were increased? This would reward savers (surely a good thing), force people with too much debt out of the mortgage market (harsh but maybe necessary), support pension plans (because of higher interest rates on gilts for example) and generally help the person in the street. Or don't they matter any more?
I confess to a certain bafflement at the reasoning on this one - why do something that is likely to create again one of the conditions that has got us into this mess in the first place...... |
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Darren
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Joined: 11 May 2006
Posts: 2131
Location: Cheltenham
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| Posted: Fri Nov 07, 2008 8:36 am Post subject: |
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An interest rate cut is/was needed to encourage people to spend, as well as make it easier for businesses to borrow (in theory).
When faced with a recession, the risks of small and larger companies going out of business is huge, because people are not spending money on them, both domestically and abroad. On a grander scale, this affects the economy as a whole because the country's output is less.
If you raised interest rates now, everyone would save what they could, meaning no-one spends any money, companies go out of business (or at least the share prices plummet, affecting many pension plans as you mention), the economy shrinks more and this recession is a lot deeper than it otherwise needs to be.
There is a fine line to balance here, and this is the Bank of England's only weapon to try and keep money going through the system, and to encourage banks to start lending to each other again. |
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accajacca
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Joined: 18 Dec 2007
Posts: 1322
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| Posted: Tue Nov 11, 2008 4:32 pm Post subject: |
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| hope nobody's planning on going on holiday next year 'cause a great british pound ain't gonna get ya much past the coast... quite a sell off going on. |
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lenahan
Listed Winner
Joined: 24 Sep 2006
Posts: 504
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| Posted: Tue Nov 11, 2008 5:00 pm Post subject: |
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| accajacca wrote: | | hope nobody's planning on going on holiday next year 'cause a great british pound ain't gonna get ya much past the coast... quite a sell off going on. |
I think the days of cheap holidays abroad for UK citizens are a thing of the past.
I cant see any way other than down for Sterling on the world currency markets. Probably not as bad as what the US dollar is likely to experience mind you.
Seems to have been fairly quite on market movements over the last week or so.
The calm before the next storm? Whats coming next? |
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YAIYAM
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Joined: 21 Feb 2006
Posts: 9130
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| Posted: Tue Nov 11, 2008 5:12 pm Post subject: |
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| accajacca wrote: | | hope nobody's planning on going on holiday next year 'cause a great british pound ain't gonna get ya much past the coast... quite a sell off going on. |
I have already declared to myself that 2009 is going to be a big holiday year
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Hear The Echo has more chance than Numbersixvalverde did |
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accajacca
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Joined: 18 Dec 2007
Posts: 1322
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| Posted: Tue Nov 11, 2008 7:17 pm Post subject: |
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| lenahan wrote: | | accajacca wrote: | | hope nobody's planning on going on holiday next year 'cause a great british pound ain't gonna get ya much past the coast... quite a sell off going on. |
I think the days of cheap holidays abroad for UK citizens are a thing of the past.
I cant see any way other than down for Sterling on the world currency markets. Probably not as bad as what the US dollar is likely to experience mind you.
Seems to have been fairly quite on market movements over the last week or so.
The calm before the next storm? Whats coming next? |
wouldn't bet on it. dollar is a traditional recession safehaven, their rates are at 1% so can't fall as far as uk eurozone/uk rates could from here. if people start panicking they buy gold (although i doubt inflation hedging will be top of most peoples' priorities somehow) which is dollar priced.
whether you believe in technicals or not, pull up a chart of cable or e/$ and see if you can pick the trend
in spite of the us's borrowing to fund the bailout (insignificant compared to ours in terms of % of GDP) long us bonds will still feature in alot of portfolios if this shitty market carries on - and you'll need dollars to buy those.
all in all, i would expect sterling to be alot weaker than $ over the coming months - and that's from here. over the last year or so the pound is already 25% weaker in dollar terms.
i still think this second wave of selling we're seeing has further to run. sooooo many private clients AND institutions have leveraged positions still to unwind, and i just don't believe it's all over. i've been short the pound, long the dollar and short equities. the first two i got right, the latter i got squeezed out of 
i'll be boring my kids, and their kids, and their kids about the market of 2007 in 50 years time |
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accajacca
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Joined: 18 Dec 2007
Posts: 1322
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| Posted: Wed Nov 12, 2008 5:15 pm Post subject: |
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| accajacca wrote: | | lenahan wrote: | | accajacca wrote: | | hope nobody's planning on going on holiday next year 'cause a great british pound ain't gonna get ya much past the coast... quite a sell off going on. |
I think the days of cheap holidays abroad for UK citizens are a thing of the past.
I cant see any way other than down for Sterling on the world currency markets. Probably not as bad as what the US dollar is likely to experience mind you.
Seems to have been fairly quite on market movements over the last week or so.
The calm before the next storm? Whats coming next? |
wouldn't bet on it. dollar is a traditional recession safehaven, their rates are at 1% so can't fall as far as uk eurozone/uk rates could from here. if people start panicking they buy gold (although i doubt inflation hedging will be top of most peoples' priorities somehow) which is dollar priced.
whether you believe in technicals or not, pull up a chart of cable or e/$ and see if you can pick the trend
in spite of the us's borrowing to fund the bailout (insignificant compared to ours in terms of % of GDP) long us bonds will still feature in alot of portfolios if this shitty market carries on - and you'll need dollars to buy those.
all in all, i would expect sterling to be alot weaker than $ over the coming months - and that's from here. over the last year or so the pound is already 25% weaker in dollar terms.
i still think this second wave of selling we're seeing has further to run. sooooo many private clients AND institutions have leveraged positions still to unwind, and i just don't believe it's all over. i've been short the pound, long the dollar and short equities. the first two i got right, the latter i got squeezed out of
i'll be boring my kids, and their kids, and their kids about the market of 2007 in 50 years time |
you can't say you weren't warned... the pound has well and truly fallen out of bed. |
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