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http://www.geocities.com/nvithalani
Charts -- Naval Vithalani, 12:18:04 12/08/03 Mon
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Re: Charts -- Naval Vithalani, 12:20:32 12/08/03 Mon
http://www.geocities.com/tonaval/charts/euro.jpg
http://www.geocities.com/tonaval/charts/chf1stdec.jpg
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The market has again misunderstood the Fed' view -- Naval Vithalani, 12:58:44 07/16/03 Wed
Debt, Debt, Debt....this will bring down this house of cards.
The declining Bond prices mean that the housing sector that was expected to top out and crash in Jan 2004 might explode earlier around October/November.
The rising borrowing costs are also going to hurt corporations, consumers and banks.
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Chf Chart -- Naval Vithalani, 18:15:49 07/06/03 Sun
CHF chart
http://geocities.com/nvcharts/
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Sinking US dollar 'could drag world under' -- Naval Vithalani, 17:43:04 07/06/03 Sun
Sinking US dollar 'could drag world under'
The Bank of International Settlements fears a deflationary crisis because the global economy is too tied to America. William Keegan reports
Unless the leading industrial countries get their act together and pursue compatible economic policies, the world economy may be threatened by 1930s-style
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competitive devaluation and an outbreak of protectionism.
This warning comes from the Bank for International Settlements (BIS), one of the world's most prestigious international financial institutions.
In its authoritative annual report, the BIS warns that: 'The global economy faces a fundamental dilemma, which is becoming more acute with time. How can imbalances in growth and external accounts across the major economic regions be resolved while maintaining robust global growth overall?'
The bank suggests that the rest of the world has been far too dependent on the economic stimulus provided by the United States and that the ongoing decline in the dollar is going to make life much more difficult for Europe and Japan.
The report warns that unless other countries supplement fashionable 'structural reforms' with 'more expansionary demand management policies' there must be a question mark over 'whether domestic demand will expand elsewhere, notably in continental Europe and Japan, after a long period of weakness'.
Known as 'the central bankers' bank', the BIS, headed by Malcolm Knight, is involved with banking and other financial regulation and has a particular concern about the dangers of systemic weakness in the world economy.
It says that 'the institutional underpinnings of the financial system require further strengthening' and expresses grave concern about the erosion of trust in financial markets. 'If trust in the integrity of the capitalist system is crucial to its proper functioning,' says the BIS, 'then it is important that wrongdoers are punished and are seen to have been punished.'
From its position as a central observer of the regulatory effort, the BIS plainly believes that some financial operators have been getting away with murder. 'Given the flagrant excesses of recent years, it is by no means clear that enough has yet been done to re-establish trust in the system,' it comments.
The central bankers' bank points to the large overhang of industrial excess capacity in the US from the earlier boom, with capacity utilisation at a 20-year low and debt levels still high, and argues that the current level of Wall Street 'can only be justified by expectations of an economic rebound and sharp increase in profits'.
The BIS highlights the fact that, although devaluation of the dollar is a necessary part of the current adjustment process (ie, making American exports more competitive and lessening US dependence on foreign funds to finance its imports) 'about half of the US current account deficit today is concentrated in countries whose currencies have closely tracked the dollar'. The main culprit here is China, which, by maintaining its link with the dollar, has now become supercompetitive in international trade.
The BIS warns that this adds to the upward pressure on the yen and the euro. The implication is that the European Central Bank, and individual European governments, should be doing more to boost domestic demand. In which connection it is noteworthy that the German government is now bringing forward tax cuts originally designated for 2005, and Chancellor Gerhard Schroeder last week dropped heavy hints to the ECB that it should ease further.
It is especially interesting - and disturbing - that the BIS is so concerned about the threat of deflation. Central bankers are traditionally more concerned about inflation, even when it is at comparatively low levels. A schism has now opened up in central banking circles, with the Federal Reserve and the BIS worried about deflation, but Wim Duisenberg, the retiring president of the ECB, still issuing warnings about the 'need' for Germany and other countries to adhere to the Stability Pact.
In this context it was interesting that Sir Edward George, in his recent retirement interview with The Observer, indicated that he thought 'structural reform' was not enough to resolve continental Europe's economic difficulties and that active measures should be taken to expand demand. (George was also, until last week, chairman of the high-powered Group of 10 leading central bankers that meets most months under the auspices of the BIS in Basle.)
The BIS states: 'One of the most daunting challenges faced by central banks in a deflationary environment is the zero lower bound constraint' - the fact that interest rates cannot fall below zero, thereby weakening the effectiveness of monetary policy.
As the BIS concedes: 'There are limits to the effectiveness of monetary policy.' It calls upon central banks 'to explore systematically, along with fiscal and prudential authorities, the set of policy options available to address deflationary forces well in advance of their actual emergence.'
The bank acknowledges that such an approach would involve 'co-ordination of policies across separate institutions' and might raise questions about central bank independence. But it emphasises that the issue is too important to ignore: 'This risk could be worth bearing if the exploration of such options helped to inspire confidence in the ability of the central bank, and policymakers as a group, to fight deflation.'
Implicit in the BIS's remarkably frank admission of its concerns is a historic acknowledgement by the kings of Central banking that the once-fashionable monetarist belief in price stability as the great economic panacea has proved seriously defective.
Referring to 'excessive optimism and credit expansion, asset price and spending bubbles, and balance sheet problems that subsequently rebounded on the financial system' the BIS concludes: 'Clearly, the achievement of price stability, with its unquestioned merits, has not been sufficient to ensure the avoidance of financial instability.'
That, in central bankers' speak, is quite an acknowledgement.
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SNP Chart -- Naval Vithalani, 05:57:00 06/16/03 Mon
SNP500
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The Economist survey on the Housing Bubble -- Naval Vithalani, 17:10:46 05/31/03 Sat
The Economist has run a major section examining the housing bubbles that are popping up around the world.
http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=1794873
http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=1794913
http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=1794925
http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=1794899
http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=1794961
http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=1794945
http://www.economist.com/printedition/displayStory.cfm?Story_ID=1794861
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Deflation -- Naval Vithalani, 12:38:51 05/30/03 Fri
WASHINGTON, May 29 (Reuters) - Buying longer-term government debt could prove to be the Federal Reserve`s best anti-deflation tool if it ran out of room to cut interest rates, but such a strategy is not without problems, researchers at the Dallas Federal Reserve Bank said.
In a paper posted on the regional Fed bank`s Web site earlier this week, economists Evan Koenig and Jim Dolmas said the issue is ripe for consideration because the Fed has little room to maneuver on short-term interest rates and the economy may need more stimulus.
"Since August ... the incipient (economic) recovery hasn`t unfolded according to plan," the researchers said in the paper, which was based on a presentation they had made to the regional Fed bank`s Board of Directors.
"We`re hopeful that positive trends will re-emerge now that the Iraq situation has been more-or-less resolved. But if we`re wrong, or if another adverse shock hits the world economy, then new stimulus will be required."
The authors said that if the benchmark overnight rate were to drop much further from its current low of 1.25 percent, popular money market mutual funds could find it difficult to cover their costs -- an issue Fed chief Alan Greenspan touched on in congressional testimony last week.
Because of the market stress a low overnight rate might cause, many economists on Wall Street think the Fed could turn to so-called unconventional policy tools once the rate reached 0.75 percentage point if further stimulus were needed.
Dallas Fed Research Director Harvey Rosenblum has said Fed policymakers would discuss "unconventional" tools at their next meeting on June 24-25.
The authors outline a number of tactics the Fed could use, but hone in on the idea of buying longer-term government debt.
"In the event it must act alone, the Fed`s best policy option is probably open-market purchases of longer-term government bonds," they said. The Fed currently conducts open market operations in short-term securities only.
They warn, however, that calibrating such operations could prove difficult.
"No one, we believe, has a good quantitative sense of the mechanics of this strategy -- that is, what size operations are needed to secure a given stimulus?" Koenig and Dolmas said.
"If standard policy options are exhausted, the Fed`s quiver is by no means empty. But the arrows that remain are less familiar and, perhaps, not quite as straight as the ones that have already been fired."
One of the other measures they said the Fed could pursue would be to substantially weaken the dollar.
But they cautioned that a policy of foreign exchange intervention would, in effect, be conducting a monetary contraction in the economies of U.S. trading partners.
"If the foreign central bank was attempting to pursue a neutral or expansionary policy, the Fed`s action might generate some consternation or even a policy response," they warned.
The researchers also said it would be possible for the Fed to essentially underwrite a large expansion of fiscal policy by purchasing any fresh government debt.
They further said the idea of instituting a "carry tax" on money merited further study as a possible way to eliminate the so-called zero-bound problem that comes with interest rates.
"This is particularly the case if achieving and maintaining price stability makes bumping up against the zero interest rate bound a more frequent event," they said.
Since interest rates cannot drop below zero, a central bank faces a limit in the degree to which it can rely on lowering rates to spur growth.
A carry tax would lower the value of currency the longer it is held without making a transaction, offering a means to put in place what would effectively be a negative interest rate.
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Great words -- sunny, 09:55:13 05/14/03 Wed
A friend of ours now living in London told us some time ago of an astounding conversation he had in the early 1970s. At a lunch with Mr. Greenspan (when he ran his own economic advisory service), they discussed gold and the Kondratieff Cycles.
Mr. Greenspan stated that he would love to be head of the Fed when the Kondratieff Cycle was due to end in the late 1980s. He was quite sure he could overcome the deflationary impact of the cycle by injecting sufficient credit into the system to offset inflation.
He ended the conversation by saying that should he fail to achieve his objective, there was a chance that when the cycle did end, " the resulting Depression would be by far the biggest the world has ever known".
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system -- vak001, 13:32:05 05/02/03 Fri
Research of trade accuracy and R multiples -- Bill, 07:25:50 04/23/03 Wed
http://www.reefcap.com/ubb/Forum1/HTML/001299.html
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Non Farm Payrolls -- Naval Vithalani, 07:10:02 05/02/03 Fri
Non Farm Payrolls is expected to decline by 125,000.
We will be back to normal from monday.
Hope you'll have a profitable day
Naval Vithalani
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Denial -- Naval Vithalani, 12:59:01 04/28/03 Mon
.....there is a perception in certain quarters tht the world cant live without the USD..everytime the euro touches 1.10 we have anybody n everybody jumping around n callin the end of the euro` world....there is a denial tht the world cant live without the usd.....the reality is tht the show will go on....
wht most guys forget to take into consideration in the equation is tht the US has a DEBT problem which most guys are ready to forgive and forget...thts if u read some views....u cant run your car on borrowed petrol everyday ....someday someone` gonna say enough..we wont lend u the petrol to move an inch......come on we have 25% of production capacity sitting idle n u expect manufacturing survey to go up to the Roaring 90s levels...??..... i think am the only one here..who still think tht we`re seeing the begining of something big with respect to the usd...
only my view ok n i may be wrong...
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G'morning -- Naval Vithalani, 06:08:49 04/23/03 Wed
Wall Street did catch some magic dust from the souls of her feet....
More supply to hit the treasury markets and this could be the first indicator whether or not foreign investors are backing US paper/usd...this is the litmus test for the usd...with declining yields how far this rally' goin to last...
FR Consumer Spending expected 0.3%
IT 12 Cities CPI expected 0.2%
UK MPC Minutes expected to show 7-2 split.
Hope you'll have a profitable day
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G'morning -- Naval Vithalani, 08:01:28 04/22/03 Tue
yep MSFT` earnings rose 2%...makes u wonder who` so confident about the recovery story tht they`re going out n buying a stock selling at 40/50times earnings and whose earnings only rise 2-6%..n tht too Pro Forma earnings.....
i dont know but everyone` pointing to china as an eco super power in the coming yrs...of wht limited knowledge i have of china nearly 2/3 of the population is living in the rural areas...once the US grinds to a halt....china will either have to look at domestic demand..which i doubt will be sustained once the export market is hit....or it will end up with the same over capacity problems..maybe something more...so this thing isnt goin anywhere until we clean up the whole thing..n thts goin to take a lot of time....my view ok...;)
LEI was down by 0.2% "inline" thts good...nearly 57% cos have met the "lowered expectations " news ....european markets are undecided n Nikkei was down 178pts..tech` take a hit - Mr. Softie, IBM, Infineon,STMicro etc
UK M4 expected at 7%
UK M4 Lending expected at £9bln.
GE CPI expected at 1.1%
GE PPI expected at 1.8%
Hope you`ll have a profitable day.
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wobbly -- Michelle, 16:32:16 04/21/03 Mon
Hey Tiger great article...you going a bit wobbly too..hehe..so you are betting that this isnt "only a recession" but something deeper than that right
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G'morning -- Naval Vithalani, 06:46:20 04/16/03 Wed
Markets are looking ahead...when equities stop going down on bad news isnt it goodnews for equity holders???
Nasdaq futures are higher today and looks like the gains will be carried over into nyc trading.
UK
Unemployment rate 3.1%, market expectation 3.1%.
Change expected 3000, market expectation 7000.
BOE - chances of 25bps cut in May are very high.
EUR
HICP expected 2.4%, market expectation 2.4%.
Industrial production expected 0.4%, market expectation 0.4%.
Hope you'll have a profitable day
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G'morning -- Naval Vithalani, 06:45:23 04/15/03 Tue
The focus on economic news returns and the earnings season now in full swing, equities are likely to keep USD supportive. Overnight we had a good run on wallstreet but will it hold on to those gains, looks like this week it might just hang in there. Govt paper is under pressure in Europe and in the US...
UK RPI-X is expected at 3%, market expectation 2.9%
GE ZEW Index is expected at 15, market expectation 19
FR Industrial Production is expected at 0.9%, market expectation 0.7%
Euro might come under some pressure today....
Hope you'll have a profitable day
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Re: G'morning -- Michelle, 15:55:27 04/15/03 Tue
Tiger you said the day we see
1. usd red.
2. us paper red.
3. dow red
thts the day to sell usd.......
you mean a dollar crash?
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Insider Trading -- KC, 15:43:57 04/14/03 Mon
Could anyone please help me find information on the web site "insiderscores". I found it a useful site a couple of years back. Are they still active or is there another site which would help with insider buying and selling of stock?
Thanks !
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charts -- Naval Vithalani, 05:45:04 04/12/03 Sat
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Re: charts -- Naval Vithalani, 11:09:03 04/14/03 Mon
http://www.geocities.com/nvbooks/euro1104.jpg
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Japan - Is It Happening Here? -- Lussenheide, 02:47:14 04/11/03 Fri
The Japanese stock market and economy have been sidetracked for well over 13 years. After hitting a high of 38,915 on December 29, 1989 the Nikkei 225 average has slipped to just over 8000 today. This represents a loss of close to 80%. Many privately and publicly wonder, if this is the long term destiny for the United States stock markets as well. I am of the reasoned opinion that we are not!
A little bit of history will help us decipher the events and see the dissimilarity to our own markets. The Nikkei 225 stood at its alltime low of 85.25 in July of 1950. From there it had a tremendous 39 year bullish trend returning on average a 17% compounded return annually just from capital appreciation alone. If one were to include dividends, the return was close to 20% per year! The Price/Earnings ratio of Japan's bluest bluechips was near 50! This represents one of the most incredible bull runs ever in both size and duration in history. The United States has never come close to such irrational exuberance. Obviously, this type of return was a bubble and was bound to burst.
Through an unhealthy tight alliance of trade protectionism, government, business consortiums and bizarre accounting techniques, the Japanese created the illusion of an economic juggernaut. It is not unfair to say that the Japanese market was sort of an Enron, but on a national scale! The Japanese took a huge market share of the world's steel industry through the help of government subsidies, yet only ever produced a return of 1% annually on this huge investment. Protectionism encouraged lack of innovation and change within domestic industries. Because of cross relationships between the banks and corporations, bad news was secreted away with unacceptable accounting practices and lack of disclosure on a massive scale. All towers built on sand eventually fall, but the truth of their predicament was denied constantly as its market and currency fell thru the 1990s. Cultural bias against admitting to failure further exacerbated the situation. Today,13 years later, with the Nikkei at 8000, the overall return since 1950 works out to 9% annually. This is in line with most other stock market returns over the same period of time. Market P/Es are now much more reasonable in the lower 20s and interest rates are virtually zero. In fact Japan has probably found its feet and better days are ahead, but it took this 13 year period of suffering to get here.
Can it happen here too? In a word...No! Although we have experienced a large drawdown over recent years, our system is the most self cleansing of any stock market and economy in the world. We do not have a general practice of trade protectionism, and in spite of scandals like Enron, our accounting is for the most part, very much above board. There is a healthy enough distance between lenders, government and investors, that we will allow for failure quickly rather than slowly. In fact, it can be argued that the best thing about the American free enterprise system is that it allows for failure faster than any other system. This constant reengineering and creative destruction of our business order allows for capital to flow to the most efficient places within it. What has taken Japan 14 years of pain to accomplish we have been able to do in 3. Although it may take a bit more time for the market averages to reflect it, the United States continues to be an excellent place for economic success in the future. Count on it!
Bill Lussenheide- An Invitation To Learn More http://www.InvestmentWarrior.com
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G'morning -- Naval Vithalani, 06:57:38 04/10/03 Thu
The Bank of England MPC is expected to reduce rats by 25bps today.
US Trade Balance for Feb is expected at ($43bln), market expectation is ($42bln)
we might see the Euro decline from 1.0835/50 levels and maintain our longterm view with respect to the Euro.
Hope you'll have a profitable day,
Naval Vithalani
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Sadam undersiege -- Naval Vithalani, 05:34:21 04/07/03 Mon
2 tanks have entered the presidential palace, the war ends today 7th apr.
we will see the usd rally to around 1.0450s this week, the victory rally..
hope you'll have a profitable week
naval vithalani
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Update -- Naval Vithalani, 07:41:36 04/01/03 Tue
TANKAN was pre war....the actual effect of the war will be knw later...so TANKAN` expected to decline further the next time around....continuing the same views...on euro, yen, gold....
UK CIPS expected at 48.4
EU PMI expected at 49.5
GE PMI expected at 49
FR PMI expected at 50.5
FR Consumer Confidence expected at (27)
euro we might see some 20/30p weakness in early europe..but later 0950s+ n in the week a move to 1.10.
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Update -- Naval Vithalani, 07:41:59 03/28/03 Fri
war isnt going as per plans [it never does]....Brent for may delivery above $27.85...wallstreet might react to the news of various bottlenecks to baghdad......ECB says more concerned about growth..thts a change of heart frm the inflation fighting days so we are looking at a rate cuts by the major cbs.
The global economy reached the tipping point and only a catalyst is needed. The problem isnt the war or sadam...its the cos..their earnings..debt...stock market valuations..
UK Gfk consumer index expected at (10)
GE Gfk consumer index exepcted at 3.3
FR Unemployment rate expected at 9.2%
EU M3 expected at 7.9%
Magic rallies on wallstreet - how long before the magicians run out of tricks?
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Deflation -- Naval Vithalani, 06:46:26 03/26/03 Wed
Ben S Bernanke: Deflation - making sure "it" doesn’t happen... http://www.bis.org/review/r021126d.pdf
Preventing Deflation: Lessons from Japan's Experience in the 1990s... http://www.federalreserve.gov/pubs/ifdp/2002/729/ifdp729.pdf
CAN DEFLATION BE PREVENTED?... http://web.mit.edu/krugman/www/deflator.html
America's Date with Deflation... http://www.j-bradford-delong.net/movable_type/archives/000533.html
Are We Headed Towards Global Deflation?... http://pages.stern.nyu.edu/~nroubini/Deflation.html
Inflation or Deflation?... http://www.zealllc.com/commentary/infordefpf.htm
Gold and Deflation... http://www.aei.org/publications/pubID.14829/pub_detail.asp
Debunking Deflation... http://www.gold-eagle.com/editorials_99/haynes101499.html
Defeating Deflation... http://www.noveconfinancial.com/WSJ11119.html
Ignore the ghost of deflation... http://www.samuelbrittan.co.uk/text126_p.html
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The Day Ahead -- Naval Vithalani, 05:56:51 03/20/03 Thu
we might see chf at 1.3800s n euro at 1.0650s.
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The End Game in IRAQ -- NV, 19:59:18 03/16/03 Sun
The end game in Iraq has begun, war is more likely than most people think. The political risks for Mr. Bush, Mr. Blair and Mr. Aznar are far bigger and hence the only way out is to launch an attack on Iraq at midnite gmt sunday 16th march.
The reason for an attack on the 16th is that Iraq has invited Mr. Blix and Mr. Baradei to visit Iraq and they are expected to put that the proposal before eh security council on monday. If this proposal is put forward before the council France, Russia and Germany are going to ask Mr.Blix and Mr. Baradei to go to Iraq further postponing any chance of US led attacks.
Sadam has divided Iraq into four zone and each zone will act as an independent cell...
Pres Bush has given an ultimatum to the UN either vote in our favor or we'll go our way. The risk is tht guys will vote against the US and Pres Bush might order attacks as soon as tomm itself after the vote and appear on prime time tv.
watch euro tomm.
cheers
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