That’s some aggressive talk and move there Mr. Kiener… While I’m a big Gold fan, I can’t get all caught up in aggressive talk like that… Got to stay steady Eddie…

You know… One would have thought that the Fed’s announcement on Monday that they were going to begin paying interest on reserve balances at the Fed would have given the markets some room to breathe… Then follow that announcement up with the Fed’s announcement yesterday that they plan to purchase commercial paper directly from issuers, would have really gotten the market’s attention… It got mine! This is huge folks… Those Corporations that depended on Commercial Paper issuance as a part of their financing, had seen this market dry up and wilt away since last August (2007)…

Of all the things the Fed has done and I have ripped them for, this is one that makes some sense… But again, why is the Fed having to step in to deal with this? Who gave them the authority to do this? Is that part of the Federal Reserve Act of 1934? Or whatever year it was they became a power!

But nooooooooo! The markets don’t care right now, they have focused strictly on unlocking the seized up credit markets. I was asked during a radio interview yesterday whether this credit market seizing up was the “real” culprit in all this… I said, “well, it is now! Obviously, there have been other culprits, subprime, toxic waste bonds, FASB accounting rules, etc., but right here, right now, it’s all about unlocking the seized up credit market”…

As I look at the currencies right now I see a massive overbought U.S. dollar… (that’s my opinion, as I see it) It has gotten in this overbought position based on a flight to safety into U.S. Treasuries… But what happens when / if all the plans of the Fed and Treasury do work, and brighter days are ahead for the U.S. credit market and financial institutions? Will we see massive amounts of U.S. Treasury purchases that were made this year, sold, and a repatriation to the base currency of the investors? Now that would certainly lead to a weaker dollar once again, and the fundamentals would come shining through, eh? Well, that’s the way I see it… But I hear you asking… Hey, Chuck… What happens if the un-dynamic duo’s (Paulson and Bernanke) plans don’t spell relief like Rolaids? What then, Big Guy? Hmmm… I guess you would still see the Treasuries being bought, and a stronger dollar… The dollar / currencies trades could end up being strictly tied to if the U.S. is in trouble or not…

Speaking of being in trouble or not… Yesterday, I told you about the Icelandic krona being pegged to the euro at 131… Well, I called a dealer yesterday to see where he was quoting krona, and he had it pegged at 255 euro, which would be $187 in dollars… And… Our foreign bonds trader, Don Ries, came to me yesterday and said he thought his clearing broker would deal in krona… I said, “get him on the phone and make certain of that.” Soon, Don came back to say that clearing broker withdrew his bid/ offer on krona. I know it wasn’t a popular decision on Monday to have to sell the krona we had due, since there was no longer a forward market, but it sure looks like it was the best one we could have made!
THIS JUST CAME ACROSS THE SCREENS FOLKS!

The Fed, European Central Bank, Bank of England and the Bank of Canada have all cut interest rates in a coordinated rate cut move before the markets in the U.S. open! The Fed cut rates 50 BPS to 1.50%! I’m looking all over the board for the size of the other Central Bank cuts… The Fed made the announcement, and said the other banks would announce their rate cuts…

I saw a blip that the ECB said that “inflation risks had weakened”… Since when? I guess when Big Brother (the Fed) calls and says they need a rate cut from them, they say, “how big?” I’m shaking my head in disbelief… The ECB has allowed the Fed to dictate rate policy…

OK… I now see that the ECB also cut 50 BPS… So… You see, the Fed needed a cut, like I said earlier today, and to keep the markets from jumping all over the dollar for lack of rate differentials, the Fed got the ECB to keep in line, to keep the differentials the same, etc.

The yen has lost ground since this move was announced, and the euro has gained 1/2 cent… So, the crosses to yen are causing problems! So… Earlier I talked about yen moving to 98… Well it’s back to 100… So much for all that!

I could go on all morning about this move, but I have to tell you it has really lit a fire under the euro, and it’s now up one full cent since the announcement!

I’ll have more on this tomorrow, you can bet your sweet bippee!

Currencies today 10/8/08: A$ .6675, kiwi .6010, C$ .9050, euro 1.3720, sterling 1.7550, Swiss .8840, ISK 187, rand 9.20, krone 6.1150, SEK 7.0640, forint 184.10, zloty 2.5225, koruna 17.9850, yen 100, baht 34.40, sing 1.4640, HKD 7.7625, INR 48, China 6.8175, pesos 12.84, BRL 2.3110, dollar index 80.62, Oil $87.45, Silver $11.86, and Gold… $912.25

That’s it for today… So… The rumored coordinated rate cuts came to fruition… Very interesting, eh?

Source: Coordinated Rate Cuts!

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