Posted on: 20-09-07 11:03:33
Tomorrow is a big day for the Canadian Markets. Shareholders are to vote on the buyout of BCE. If that goes through it shall be the biggest ever such buyout in Canada and almost $19 Billion will come back into the economy. Would the markets take off? Investors have to find ways to reinvest the money - where? Real Estate? Stocks - most probably!
What do you say? Buy today?
Quote:
Originally posted by Iceberg
CAD is at 0.99926 to the USD. That is parity or just about it. Now what happens next? Does CAD go above USD? What about he Canadian economy? Is the manufacturing showing or anticipating a slow down? Well it has to.
Crazy man. How one move on the sub prime lending a few years ago affects economies across the world.
Even though the loonie is going strong, we are still paying more for products that you'll find in both countries.
Why don't we get better deal in Gas atleast ... they seem to change price everyday according to market?
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Mumbai Maazi Ladki ...
And we are still paying $421 for OCI card.
For any item, be it car, garments, gas, reliance india call or electronics we are paying more, before tax, than our US neighbours. Why loonie value has no impact on this?
I think manufacturers and retailers are not passing on their savings to consumers in canada.
Quote:
Originally posted by Iceberg
1) So cutting the rates is plugging just one hole in a leaky boat. If all the cut is going to take care is the defaults on the mortgage payments, the cut was nothing but forced upon the fed.
2)So it was not necessary in the interest of the overall US economy.
3)So now they would have more problems like inflation to take care of.
4)Also with the reduced rates the sub prime loans continue to exist (whatever already lent out). So any future increase will impact the mortgage industry, correct? So if the inflation rises and a rate hike becomes necessary fed will have to choose between the devil and the deep sea.
5)Or is the fed anyway anticipating a huge slow down of the US economy and possibly a recession.
6)In that scenario, there can be even more defaults.
Crazy? Anyway this is what I have understood with my limited knowledge of the mortgage industry.
I broke up your letter with numbers to answer- to the point- raised.
1) You said it correctly. It is a finger up the DYKE. Take one million mortgages with an average value of $250,000.00 = Mind boggling figure.
2) Everyone stands up to the occasion and does something to improve the situation, this time, may be just too little too late. See where the economy is heading here under.
3) Problems problems, yes, they have a lot of them. I cannot enumerate them.
4) They are working on it. All the big guns are there at the CRL meet.
5) See where the US economy is currently from the crisis chart. It is heading up wards, so be aware and take advantage of it. !
6) Your guess is as good as mine. There will be many more defaults and then some more.
You say CRAZY? I would say mind boggling.
Here is some material to read and expand upon.
ON SUB PRIME:
The second kafuffle erupted after the Center for Responsible Lending (CRL) issued a Paper on March 27 updating earlier reports with 4th Quarter 2006 data and claiming that "subprime originations during 1998 to 2006 have led or will lead to a net loss of homeownership for almost one million families." In fact, the Paper states, a new homeownership loss occurs in subprime loans made in every one of the past nine years.
Numbers provided by the Center claim that, in the 1998-2006 period, 1,435,472 subprime loans were used to purchase homes by first-time homebuyers and that 2,366,901 have or will be foreclosed for a net homeownership loss of 931,439.
Even before the Federal Reserve's half point rate cut on Tuesday Freddie Mac's Primary Mortgage Market Survey showed another dramatic downturn in both long and short term interest rates for conventional mortgages.
The Federal Funds, the rate impacted by the Federal Reserve's action on Tuesday actually has no direct relation to Treasury rates which tend to determine mortgage interest. Still there is a synchronicity between the two and it is likely that interest rates will come down further next week and, given the mid-week dates of the Freddie Mac and Mortgage Bankers Association Survey, probably the week after that.
ON INFLATION:
By Barbara Hagenbaugh, USA TODAY
WASHINGTON — Data suggesting rising inflation have some economists wondering if the Federal Reserve has kept interest rates too low for too long.
In a USA TODAY survey of 54 economists, one-third said U.S. interest rate policy was "too easy." The survey was conducted March 19-24, a few days before two reports added to other recent data hinting at an increase in inflation. ( Related: Results of USA TODAY economists' survey.)
ECONOMY & CRISIS
http://www.bestwayotinvest.com" rel="nofollow">LINK Please see the crisis control chart.
N Y TIMES. Please read todays article:
WASHINGTON, Sept. 20 — Ben S. Bernanke, the chairman of the Federal Reserve, said today that the growing turmoil from increasingly permissive subprime lending had demonstrated a need for tougher restrictions on what borrowers and lenders can do.
Hope this helps and confirms your findings and understanding of the topic.
Freddie.
Given that USD and CAD are now at parity and USD expected to slide further, I have a question for the investment/finance folks here -
If one is investing in foreign mutual funds, such as US index-based funds, does it make sense to go with currency neutral funds or just purchase the regular fund (i.e. currency sensitive)?
Most funds have a regular (non-hedged) version and a currency hedged version - which one makes more sense at this point?
What about European and other foreign market funds - do hedged or non-hedged funds make sense?
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Quote:
Originally posted by pratickm
Given that USD and CAD are now at parity and USD expected to slide further, I have a question for the investment/finance folks here -
If one is investing in foreign mutual funds, such as US index-based funds, does it make sense to go with currency neutral funds or just purchase the regular fund (i.e. currency sensitive)?
Most funds have a regular (non-hedged) version and a currency hedged version - which one makes more sense at this point?
What about European and other foreign market funds - do hedged or non-hedged funds make sense?
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Let me start replying to this by saying, we both live here in Canada.
There are two ways of investing for us here. One sheltered and the other in open margined account. If the returns are greater and are sheltered and also hedged, then we know we are doing excellently in there. In the margin account if you are purchasing the unhedged or original funds, we have to trod on egg shells to see if we are making money or loosing all our marbles. Hence the onus of protecting the capital is on us. This is not buy and hold, So we are looking at no load as well.
If that is the case, then go anywhere, where you can get better returns. You can either go index and hedge, or can go currency neutral too.
The Forex market is extremely huge and the mechanism has no brakes as far as I understand. You have also seen the current upsurge in the currency markets, especially USD/CAD. It beat the timing of all of the pundits and moved forward with a bang. It is currently volatile and unpredictable. It can swing either way any minute. What can I say?!
Since we live here in Canada and we want our funds in Canadian Dollars to pay our bills, I want my returns pegged to the local currency, just as simple as that. But if you have a little bit of risk capital and want to go the hedged route, where in they protect your principal, you will get out unscathed and if you make a killing then pay the taxes and prosper.
On this subject, if you have a few minutes and want to take advantage of the seminar run by Worden Brothers, here in Toronto, at 'The courtyard', in Brampton tomorrow at 10:00 am, you can go there and enjoy their show. Also find out how well they can set you up with their software and a huge number of mutual fund info, about 20,000 or so, and delve deeper into it. It is one of the good software shows that I have come across.
Here is their web site: <live.worden.com>
Thanks for asking.
Freddie.
