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Re: Exchange rate
The only UK one i would be concerned about is Barclays. Their name has been subject to rumours for weeks. FOMC expected to cut rates by 1% tomorrow, from 3% to 2%. This meltdown shows no sign of stopping.
Chris |
Re: Exchange rate
Chris am still at work I will try and find out for you!
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Re: Exchange rate
Originally Posted by cneldred
(Post 6076194)
I need to look into that actually, anyone know how you go about switching a UK private pension into a Canadian RRSP.
Chris However if you like I can find all this out when I speak to ours in the morning and PM you with the info (unless you're wanting it right now!!!) |
Re: Exchange rate
Originally Posted by cneldred
(Post 6076263)
The only UK one i would be concerned about is Barclays. Their name has been subject to rumours for weeks. FOMC expected to cut rates by 1% tomorrow, from 3% to 2%. This meltdown shows no sign of stopping.
Chris It would still stuff all the banks for a while if Barclays hit real issues but in the longterm would be ok. And I'm happy to hold for the long-term..... I feel a lot happier! :thumbsup: |
Re: Exchange rate
Mandy i appreciate that, i am not in a huge rush. G586, i do expect some consolidation throughout the UK banking sector during this. And i am very concerned if Barclays are in trouble, the government and BoE set a president when funded NR. A major bank like Barclays would need huge resources and i wonder where the hell they get that from.
The problem at the moment is there doesn't need to be bad news, people are just petrified. Today a huge financial clearer MF Group(Man Financial Group) got smacked, shares at one point were down 70%. All this on the back of rumours, which in turn caused a run on the institution. MF are the clearer for numerous trading houses, brokerages and a number of Hedge Funds. It means these companies have funds deposited with MF. A number of those started pulling their money back, which in turn leaves MF short of readily available cash. In the end the CEO, made a statement which steadied the shareprice somewhat, but it just shows the fear out there. In my opinion Bear Stearns won't be the last bank to go under in this mess. Chris |
Re: Exchange rate
Originally Posted by cneldred
(Post 6076423)
Mandy i appreciate that, i am not in a huge rush. G586, i do expect some consolidation throughout the UK banking sector during this. And i am very concerned if Barclays are in trouble, the government and BoE set a president when funded NR. A major bank like Barclays would need huge resources and i wonder where the hell the get that from.
The problem at the moment is there doesn't need to be bad news, people are just petrified. Today a huge financial clearer MF Group(Man Financial Group) got smacked, shares at one point were down 70%. All this on the back of rumours, which in turn caused a run on the institution. MF are the clearer for numerous trading houses, brokerages and a number of Hedge Fund. It means these companies have funds deposited with MF. A number of those started pulling their money back, which in turn leaves MF short readily available cash. In the end the CEO, made a statement which steadied the shareprice somewhat, but it just shows the fear out there. In my opinion Bear Stearns won't be the last bank to go under in this mess. Chris I saw that about MF and also Lehman getting kicked....if fear and greed drive markets, it's definitely fear that is in control just now. I'm just surprised it has gone on so long and is continuing to spiral out of control. |
Re: Exchange rate
Forgot to mention the others people are concerned about are Merrill Lynch, Citibank, Lehmans Brothers and UBS.
Goldman Sachs have results due tomorrow that may bring a relief rally. Chris |
Re: Exchange rate
Originally Posted by G586
(Post 6076441)
Yes, I agree.
I saw that about MF and also Lehman getting kicked....if fear and greed drive markets, it's definitely fear that is in control just now. I'm just surprised it has gone on so long and is continuing to spiral out of control. Chris |
Re: Exchange rate
Originally Posted by cneldred
(Post 6076458)
You talk about fear, not wrong. After Friday and the scary moves we had i was trading 20% on my normal size today, and still scared stiff.:eek:
Chris Capital preservation is key, isn't it? You take it easy now, staying out of the market is also taking a position in times like this! |
Re: Exchange rate
Investors nervous about Sterling
- Uncomfortable parallels between US and UK economies - Loonie suffers too There was an equality of misery between the Pound, the US Dollar and the Canadian Dollar last week. Sterling veered and backed between C$1.9850 and C$2.02 without really going anywhere. It opened in London this morning at C$1.99, unchanged on the week. Economic data from the UK presented a mixed bag. Industrial and manufacturing production figures kicked off the week with a reminder that activity is slowing. Producer prices were high enough to show that the Bank of England still has grounds for concern that inflation remains a threat. Although manufacturers are evidently absorbing much of the increased cost of materials and energy - up by 19 per cent in the year to February - they are not wearing it all. Factory gate prices went up by nearly 6 per cent over the same period. The same is happening on the High Street. Retail sales grew by 1.5 per cent in the year to January but they did so only because retailers were prepared to slash prices. Prices were also lower in the residential property market. The RICS House Price Balance, which compares the number of agents reporting higher prices with those reporting price falls, came in at -64, its lowest level since the last big property slowdown in 1990. But it was not the data that hampered the Pound, it was the markets' vicious swing towards risk-aversion. The US Federal Reserve's announcement that it would offer - in conjunction with similar moves by four other central banks - an extra $200 billion to help banks with their liquidity reminded everyone about what had happened to Northern Rock. Investors began to fret. On Friday they became more fretful when the Fed used JP Morgan as a conduit to bail out Bear Stearns. The Fed's announcement that it was lowering the discount rate and making that "emergency" funding available also to non-banks might on a good day have been seen as a positive sign. But it happened over a weekend and coincided with JP Morgan buying the ailing Bear Stearns for a pittance. Even though all this took place on the other side of the Atlantic investors were not slow to spot the parallel between what's happening in the States (falling house prices, slowing economy, falling interest rates, failing financial institutions) and what is going on in Britain. As a close neighbour and trading partner of the United States Canada could not escape the contagion. Never mind that the economic data coming out of Canada were fairly decent: housing starts were up, the trade surplus widened and the new house price index was higher. Investors were not looking at the figures, they were looking through them. The housing market is not as robust as the headline figures suggest. Although a lot of apartment blocks were started the figure could drop just as sharply next month. The trade surplus is trending lower; last week's monthly number was out of line with the trend. Turnover in existing (as apposed to new) homes is down by a tenth from a year ago; sales in Calgary and Edmonton are both down by about a third compared to 12 months ago. The governor of the Bank of Canada said last week that Canada cannot escape the economic slowdown to its south and believes that more economic stimulus will be needed "in the near future". So that's another interest rate cut in April then. What to do? As playing fields go, the one shared by the Canadian Dollar and the Pound is fairly level. Interest rates in both countries are pointing downward because their economies are slowing. In the absence of any compelling reason to do otherwise, buyers of the Canadian Dollar should hedge half their requirements, selling Sterling forward to match expected payment dates. |
Re: Exchange rate
Originally Posted by cneldred
(Post 6075888)
Both economies are experiencing slow downs and both central banks are in a cutting cycle. If a Canadian bank were to have difficulties then we would be getting much more CAD$ for our £. So you know what to pray for!!
Chris The Bank Of Montreal, the 4th largest bank, is having having difficulties: http://globaleconomicanalysis.blogsp...gin-calls.html Bank of Montreal, Canada's fourth- largest bank, will report writedowns of about C$325 million ($323.9 million) in the first quarter and replace its chief risk officer after combined trading losses and other costs topped C$1 billion over the past year. Two Bank of Montreal commercial- paper funds were downgraded to junk by DBRS after the funds failed to meet margin calls for collateral, raising the prospect of more writedowns for the bank. Or is $325 M not really a lot for a bank that size? I have no idea what a "margin call" is exactly, but it infers they owed some cash and didn't have it.... or is that wrong? Whatever, it doesn't seem to be helping our "bring back 2.35" cause!:lol: |
Re: Exchange rate
A margin call. Ok people are buying stuff on leverage, what happens is for example a German 10 yr Bund Future, initial margin for a contract is about Euro 2,500 per contract. the contract has a nominal value of Euro 100,000 and a tick (the minimum a price can move 0.01) is worth Euro 10. If i buy one contract and run it as a position.
I buy 1 contract at 118.28 and have the position overnight, the market closes at 118.18. The next day as an open position i have to deposit with the exchange the Initial Margin of Euro 2,500 plus Variation Margin Euro 100 ( 0.10 represents 10 ticks x Euro 10). The next day the market pukes, i still run the position. Market settles at 117.58 The exchange still has my Initial Margin, and now it am margined Mark to Market, 118.18 (previous days close) minus 117.58 (todays close) equals 60 ticks, x Euro 10, therefore another Variation Margin call on Euro 600. This in a nutshell is leverage and margining, if it was not for this facility i would have to stump up Euro 118,280 (118.28 x Euro 10 a tick) upon buying the 1 contract on the first day. This is basically what has happened in this case, BMO are being called for Margin. Initial Margin is what is deposited when a position is opened, Variation Margin is paid on a losing position. FYI, 325 million is peanuts. Citibank wrotedown in the region of US$16 billion. Hope that helps, sorry if it is boring. Chris |
Re: Exchange rate
You lost me at "hello" ;)
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Re: Exchange rate
Originally Posted by ann m
(Post 6076854)
You lost me at "hello" ;)
Me too! |
Re: Exchange rate
Originally Posted by cneldred
(Post 6076749)
A margin call. Ok people are buying stuff on leverage, what happens is for example a German 10 yr Bund Future, initial margin for a contract is about Euro 2,500 per contract. the contract has a nominal value of Euro 100,000 and a tick (the minimum a price can move 0.01) is worth Euro 10. If i buy one contract and run it as a position.
I buy 1 contract at 118.28 and have the position overnight, the market closes at 118.18. The next day as an open position i have to deposit with the exchange the Initial Margin of Euro 2,500 plus Variation Margin Euro 100 ( 0.10 represents 10 ticks x Euro 10). The next day the market pukes, i still run the position. Market settles at 117.58 The exchange still has my Initial Margin, and now it am margined Mark to Market, 118.18 (previous days close) minus 117.58 (todays close) equals 60 ticks, x Euro 10, therefore another Variation Margin call on Euro 600. This in a nutshell is leverage and margining, if it was not for this facility i would have to stump up Euro 118,280 (118.28 x Euro 10 a tick) upon buying the 1 contract on the first day. This is basically what has happened in this case, BMO are being called for Margin. Initial Margin is what is deposited when a position is opened, Variation Margin is paid on a losing position. FYI, 325 million is peanuts. Citibank wrotedown in the region of US$16 billion. Hope that helps, sorry if it is boring. Chris So, in a nutshell, this "bad news" isn't really that bad, and isn't going to to any damage to the loonie. Plops. :frown: |
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