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Falling US Dollar

I don't suppose the US dollar will get stronger until after the Presidential Elections. With the JPN YN trading at 106.17 to the greenback, I imagine that the boys at the BOJ (Bank of Japan) are thinking of more ways to manipulate the yen-us $ forex rate. With the weekly purchases of the greenback, there has been no movement in the forex level. The BOJ, I think, would like to see the yen trade at or above the 115 level. Well, that's not going to be happening at anytime this year or next. The US government can ill afford to let their dollar gain any real movement before the end of the year. I suspect this is due partially to politics as Bush needs US businesses to sell more abroad. Unfortunately, such tactics will not prove effective. With looming deficits, the US faces the prospects of an inflationary period in the very near term. In order to attract the needed capital to fund its current budgetary expenditures, the government will need to raise its interest rates. I would not be surprised if future interests rates hit double digits within the next 3-5 years.

CFA Level I - December 2004 Exam Registration Opens

Guess it's time to begin filling out the forms to register for the December 2004 Level I examination. I had considered waiting to sit the exam in June 2005 but have decided not to waste 6 months of my life sitting around and doing nothing. Gotta keep the brain going and feeding it with new info. (CFA.) The initial deadline for registration is mid-March. After this date, applicants have to pay an increased fee to sit the examination.

Corporate Finance Staff Burnout

Tips from CFO.com. It is the first business week of the new year and I am already burnt out!!! (CFO.com)

Rubin Warns of Dangers of US Economy

Krugman, in his NY Times editorial piece, tells of how Rubin has crossed over and now is talking about the upcoming dangers of a US economy out of control. Out of control in that the budget and trade deficits are looming over a weakened US economy. Like Rubin, Krugman does not believe the current administration can neglect to address the increasing problems of the deficits. To think that any administration can continue borrowing against the future generations or continue to allow trading partners to sell like madmen in the US, only begs for a disaster to occur. I believe the US economy can withstand a few more years of growing deficits as many of the non-US holders of US treasuries are foreign banks and governments. In effect, the rest of the world is looking after the greenback. As the world sells to the US, the world holds onto the dollar. The Japanese and the Chinese have a vested interested in ensuring that the greenback stay strong or relatively strong for the next few years. However, I would not be surprised if the Japanese and the Chinese allow the yankee dollar to fall another 10-15% by the end of the year. My outlook for the greenback: 90 yen to the dollar by year-end. The euro will be trading at 135 to the dollar. Yikes! (NY Times.)

IMF Working Paper: Free Trade Areas

Very good paper about ROO and FTA. The paper is not very long: it is about 30 pages long. Can there ever be trade agreements between two nation states that are 'free', I mean 'really free'? Somewhere in the agreement or some group on either side of the agreement is made to 'pay' or 'suffer' due to that agreement.

The Fall of the U.S. Dollar

I still believe that the US dollar is destined to fall against the Yen and Euro. I predicted a while back that the greenback would fall or the Japanese Yen would rise to the 95yen/US$. The US economy is under extreme pressure due to a variety of concerns. Whether one believes that the twin deficits are creating dark skies over the Republic or the country needs 'breathing space' in order to rebuild its economy and manufacturing base, the dollar will continue downward for the next few years. I suspect the dollar will stay stable until after the election next year but after that, it'll trade at par with the yen. (Economist.)

Fraud Sniffers

Very interesting, indeed. Forensic accounting. I wonder how well this will catch on in corporate boardrooms? (BusinessWeek.)

Can you say '79 yen to US dollar'???

I sure can! No one on the financial news programmes is talking about the 'looming problems' of the US's twin deficits. No matter how much we PRETEND that they are not real, the worse off our children will be in the future: the two-headed monster is not going to die anytime soon.

I strongly believe the US dollar is in for a 'huge correction' in the very near future. Perhaps, GW will let the dollar fall after he gets re-elected in '04. Personally, I don't think a weak dollar will look too good for GW in next year's Presidential Debates/Campaign. So, I predict the yen will shoot for the stars come March 2005. And if it comes sooner than that I won't complain. (Japaninc.net)

After reading 'Princes of the Yen', I strongly believe the central bankers will throw the world financial markets into a topsy turvy loop in order to re-position Japan in a much stronger role in the world.

The Princes at the BOJ do want Japan to 'rule' the world. Somewhere deep down, I think the Chief wants to return Japan to its former glory in the early 1930s. Having said that I believe Japan needs a stronger yen in order to do so. Many people predicted that Japan's manufacturing industry would collapse when the yen rose above the 125 yen level. Well, it didn't. Then the 'naysayers' said Japan would collapse when the yen topped the 110 yen level: Japan is still here. (ProfitResearchCenterLtd.)

Japanese companies have been dieting for the past 7 years. Slashing, burning, letting go workers. Divesting their unprofitable business lines. Now, after many years of turning around the battleship, Japanese companies are ready to fight again. As such, many companies can survive at the 100 yen mark and some, I predict, are ready to compete at the 80 yen/US dollar level in the near future.

Forex Traders

Is it safe to continue investing or should we just burn our money? (Related story.) I have to admit that when I saw all those people being led away in handcuffs I began to smile. It is about time that the government get serious about all those crooks.

Mutual Funds Scandal: Getting Worse??

How much worse can it get? Just how many firms are involved in this scandal? Half? All? I sure need to pull my money out of my mutual funds accounts and do something less risky with my cash. Perhaps, I will buy a hot dog stand and sell dogs for a living. At least I know I will always have a job and money in my pockets, right? I mean... everyone loves eating a hot dog, right? (Related story.)

Paul Krugman on the Mutual Funds Scandal

Good piece in the New York Times by economics guru, Paul Krugman. I have always enjoyed his writings ever since I read his book, Currencies and Crises, for my financial economics course at school. How many more Wall Street scandals must be endure before the whole system comes crashing down? (Related story.)

CFA Magazine Web Site

Interested in learning more about finance? Check out the CFA web site.

Putnam Investments in trouble!

Billions getting yanked from Putman. At first, a few million here and a few million there and Putnam does not worry. But, soon - as billions start walking out the door, the executives begin to 'worry' big time! (Related story.)

US GDP UP: Time to spend or save??

Wow! I sure hope this is not another magic trick by 'Merlin the Magician'. The world needs a 'shot in the arm' to get the economy going again. So many in Japan, as I am sure is the same around the world, are holding onto their wallets. No one wants to spend any 'real money'. Everytime I am about to make a big purchase (anything over C$300.00 is big to me!), I take an extra week to think about it before I plunk down my credit card. This past month, I have been trying to decide on whether to pick up a new leather jacket. I have always wanted one but could not afford it before. I have been to the clothing store about 10 times and poking at and trying it on. I am sure the store staff are about to toss me out the door and tell security to bar my entrance forever. I guess what makes me hesitant on making 'big purchases' nowadays is how I truly feel about the supposed-economic recovery everyone talks about on the 'boob tube'. Yeah, I know that as a trained economist I can read the 'tea leaves'/economic data to see a recovery taking place. What concerns me is whether the recovery is due to companies rebuilding their supply lines or replacing their old capital equipment. If so, I will hold onto my cash a little longer. But, a big 'BUT', the economic recovery is due to people opening up their wallets and purses, then I might be a wee bit more confident of a recovery. I remember in one of my economic classes when we covered 'dissaving'. I won't bore you with the definition of 'dissaving' as you can do a 'google' on it I'm sure. If the recovery is due to a massive 'dissaving' wave among the public, we are going to hit a severe credit crisis soon. That is yet another worry about any economic recovery. Just ask yourself, how much are you in debt to the credit card companies? How many of your friends and family are in the same boat? How much have you yanked out of your mutual fund accounts? And what about your RRSP? IRAs? Savings? (Related story.)