FED has cut the funds and discount rate by 50 bp each - the maximum that market had expected - and so US$ is going down like hell. USD/CAD has already touched a low of 1.0184 interbank and Euro went up to 1.3962.
For all practical purposed, USD and CAD are now the same!
My personal loss - unimaginable!
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Chandresh
Advice is free – lessons I charge for!!
Location: carl sagan's universe
Posted on: 18-09-07 14:37:21
And dig the spike in the stockmarkets immediately after.
http://www.globeinvestor.com/
Right along to 2 pm the market was trudging along and at 2.12 whoom! right up!
Too cool!
Location: carl sagan's universe
Posted on: 18-09-07 14:40:03
BTW Excel Funds is due to ring the bell at the TSX on Sep 28.
I believe it's a first that a Canadian company spawned by a South Asian will ring the bell at TSX.I may be mistaken though. Anybody knows otherwise?
Quote:
Originally posted by chandresh
FED has cut the funds and discount rate by 50 bp each - the maximum that market had expected - and so US$ is going down like hell. USD/CAD has already touched a low of 1.0184 interbank and Euro went up to 1.3962.
For all practical purposed, USD and CAD are now the same!
My personal loss - unimaginable!
Same here but holding it till I can.
Now, how FED will control the inflation? By rising the interest? Oil already touching $82.
Even with the deepest rate cut in nearly 5 years from the central bank, many of the risks for the U.S. economy are beyond its reach.
http://money.cnn.com/2007/09/13/news/economy/recession_risks/index.htm?postversion=2007091818
Can any finance / investment guru explain how the US interest rate cut will help solve the sub prime problem?
Location: carl sagan's universe
Posted on: 19-09-07 19:55:18
Good afternoon:
With yesterday's 50 bps cut to the Fed Funds rate, we would like to provide the attached commentary from Dan Chornous, our Chief Investment Officer, summarizing RBC Asset Management's view. Key messages of Dan's commentary are as follows:
The Fed's move confirms our view that the cycle of rate hikes that began in mid 2004 is over, and that a new cycle of falling rates has started. We expect the rest of the world's central banks to follow suit in the coming year.
Yesterday's cut should restore investor confidence, with concerns over the recent credit crunch subsiding.
Attention will shift back to key factors supporting a positive outlook- a durable economic cycle, low interest rates, mild inflation, profit growth, and attractive equity valuations.
In light of this move, we are reducing our recommended exposure to bonds, increasing our cash allocation, and maintaining our overweight position in equities.
Supporting our firm's asset mix changes, we refer to the following 2 charts that track the performance of bond yields and the S&P 500 one year before and after the initial Fed rate cut....
As shown in the chart on the left, over the past 50 years, 10 year bond yields have tended to decline leading up to the initial Fed rate cut. With the exception of those periods when a recession ensued, bond yields subsequently rose over the following one year period.
For stocks, the impact is even more compelling, with markets powering ahead in all cycles whether recessionary or soft landing. The median rise in all cycles is 13.9% one year following the rate cut with positive returns in 14 of the 16 previous cycles.
