WTF?

Down to 77 and change.

Europe bails out Dexia and it's currency strengthens. Absolute madness.

Edit:

Ahhh....Here's why. IMF proposing a $100 billion bailout for Italy and Spain. Print print print baby.

http://online.wsj.com/article/SB10001424....

That's friday's news, theedge.

I think today's news is the secret Merkl plan.

US bond markets are closed today ... that might also be influencing things. I am just speculating, but if you can't buy treasuries then that might have an effect.

FX--The only thing worth watching, IMO....

Okay, I'm a "Joe 6 Pack" and I don't trade for a living so please help me out here. If, as zarathustra claims, FX is the only thing worth watching then what, exactly, should I be paying attention to? The dollar vs the euro? The swiss franc? The yen? What? Can anyone help me out here please? TIA.

I never understood why the Euro goes up when they bail, but the dollar goes down when the US does the same. I would think they would both go down when the market is flooded with new money (debt).

Maybe because US is paying for both. In the case of the Euro, through currency swaps?

Tallystick +1000000000000

Apparently there's a rush for euros in the EU.

Asi, is that because the european bankers and traders need a lot of liquidity RIGHT NOW? IOW, cash is still king? TIA for an answer.

Defaulting destroys cash. Bailing out stops the cash from evaporating (in the near term).

Gajoe: I don't have a firm answer, just a suspicion. But basically what you said.

Quote:

I never understood why the Euro goes up when they bail, but the dollar goes down when the US does the same. I would think they would both go down when the market is flooded with new money (debt).

Because the majority of the debt in the world is denominated in dollars - BUT - dollars must be exchanged for local currencies to prop up insolvent banks. It's a paradox.

Not to sound like a broken record (after 3 years of repeating myself), but at some point the U$D is going to rip the face off every currency left on the planet. Yes, please continue to ridicule the priceless dollar 'theory.' It amuses me. {Full disclosure: long U$D since August 2011 and see nothing that will change this position for the foreseeable future.}

Yes, a paradox indeed. I guess the more interesting thing is the machines are programmed to run up equities on euro strength. Should be a pretty strong down move when this finally breaks.

Right, Zappafan, today is kind of freebie for the equity bulls, with the bond market closed, no US econ data to speak of, and no earnings releases that might get in the way.


Still (and this is more a big-picture issue, I think), consider this announcement today from the ECB:

http://www.ecb.int/mopo/implement/omo/ht....

Quote:

As announced by the Governing Council on 10 May 2010, the ECB conducts specific operations in order to re-absorb the liquidity injected through the Securities Markets Programme (SMP).

In this regard, the ECB will carry out a quick tender on 11 October at 11.30 in order to collect one-week fixed-term deposits with settlement day on 12 October. A variable rate tender with a maximum bid rate of 1.50% will be applied and the ECB intends to absorb an amount of EUR 163.0 billion.

The latter corresponds to the size of the SMP, taking into account transactions with settlement on or before Friday 7 October, rounded to the nearest half billion. SMP transactions which settled last week were of a volume of EUR 2,312 million. Taking into account the effect of the quarterly amortisation exercise (published in the Weekly Financial Statement last week), the rounded settled amount - and the intended amount for absorption accordingly – increased to EUR 163.0 billion.

The benchmark allotment amount in MROs takes into account the liquidity effect of non-standard measures, assuming an unchanged size of the SMP and full sterilisation of this amount via the above mentioned liquidity-absorbing operation. Fixed term deposits held with the Eurosystem are eligible as collateral for the Eurosystem's credit operations.

The ECB intends to carry out another liquidity-absorbing operation next week.

As of 8 November 2011, the maximum number of bids per counterparty will be increased from two to four in SMP related fine tuning operations carried out through variable rate tender procedures without same day settlement. In other fine-tuning operations, e.g. fine-tuning operations on the last day of the maintenance period, the maximum number of bids will continue to be limited to two.

Ah, yes, but if the banks want USDs, the ECB is happy to supply.

Quote:

I never understood why the Euro goes up when they bail, but the dollar goes down when the US does the same. I would think they would both go down when the market is flooded with new money (debt).

Selective memory. When the US passed TARP, the dollar SKYROCKETED.
9/22/08 EUR/USD @ 1.4804. This is the Monday after the weekend on which Paulson proposed his 3 page TARP bill, bailing out the banks.
10/03/08 EUR/USD @ 1.3835. This is the night the bill was signed into law
10/27/08 EUR/USD @ 1.2522. The nadir of the 15% strengthening of the dollar on the TARP bailout.

The dollar quickly plummeted 10% in early December, after the Fed announced its asset purchase plans.

Quote:

As announced by the Governing Council

"Governing Council" has a slight Brave New World/1984ish ring to it.

Quote:

The Governing Council meets once a fortnight

The Governing Council is the main decision-making body of the ECB. It consists of the six members of the Executive Board, plus the governors of the national central banks of the 17 euro area countries.

http://www.ecb.int/ecb/orga/decisions/go....

GAjoe. Our equity markets are nothing more than a derivative of the currency markets.

There are no fundamentals in our market that explain movements. e stocks move based on beta and currencies.