Archives: 11 July 2008

Bernanke opens Discount Window to GSE's

by TwoCentsEditor
Published on: 07/11/2008
Categories: Current Events, Financial Markets
Tags: , , , ,
Comments: 2 Comments

This is getting funnier by the minute. Yesterday, Hank Paulson announced that both Fannie Mae and Freddie Mac were ‘well capitalized’ and yet this afternoon, Ben Bernanke stepped on the Treasury Secretary’s toes by offering the two GSE’s use of the discount window. Undoubtedly, the Fed Chief was trying to convince traders into buying stocks on a Friday afternoon as the markets have continued their recent slide, almost unabated.

This situation bears watching over the weekend. It is eerily similar of March when Bear Stearns went from being ‘well capitalized’ on a Thursday to essentially worthless the following Monday. People need to get on the stump and in unison demand of these characters where exactly all this bailout money is coming from. I can guarantee you won’t like the answer, should they actually decide to come clean.

Crude off to the races

by TwoCentsEditor
Published on: 07/11/2008
Categories: Financial Markets, Foreign Exchange Markets, Technical Analysis
Tags: , , , ,
Comments: 2 Comments

Once again, main stream commentators have been burned by calling a premature end to the commodity (particularly oil) bull market. Crude bounced off of the trendline we have repeatedly pointed to in our premium newsletter and is now heading upward. Fueling this rise to some degree has been program trading as it is nearly certain that other technical analysts have identified the same trendline we have. Another siginficant factor has been increasing tensions over Iran and turmoil in Nigeria.

In FOREX markets, the Dollar is down against the Euro as the pair is very close to breaking $1.60; a critical resistance level. The Japanese Yen is attempting a breakout as well at 105 and is right at the 50-day moving average.

Equity markets around the globe are in a rout today as selling pressures have emerged due to the continued troubles at Fannie Mae / Freddie Mac, slow economic growth, and runaway import prices. This last item gets almost no attention even though it is a fairly accurate indicator in terms of consumer health since so much of what we buy is imported. We discussed recent trends in import prices in our 5/16/2008 issue of My Two Cents which may be read here:

Do you believe in Fairytales?

The technical rally that we have been looking for has been a no-show to this point with the major US indexes continuing to probe newer lows. In fact, as I write, the DJIA is threatening to break below 11,000, currently at 11,024.16.

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