Euro and Sterling

[jug]

There has been much said here about the closing gap between Canadian and US dollar.

However, I notice that in both the pound and the euro have been "coming down in price" as compared to our dollar. There is something to be said about this, but it is not said, since the European Economy is probably the biggest, if not second biggest in the world.

I guess the "pendulum" swings back and forth now and then.

In 2002, I paid $4.5 for a 5 Euro note. It sat in my pocket, went up to about $6.5, now it is coming down in price,

Interesting?

Any take on this

jug

 

[brewer12345]

jug, yesterday and today the USD has been falling vs. the yen and euro pretty steeply. The explanation I have heard is that the USD was appreciating because the fed was raising rates so you can get a better yield on USD cash than on euro or yen cash. Money flowed toward the yield. Now the market is convinced the fed is about done, so the money is starting to flow the other way.

I choose to hedge my bets and just own some non-USD bonds (8 to 10% of the port).

 

[jug]

jug, yesterday and today the USD has been falling vs. the yen and euro pretty steeply.  The explanation I have heard is that the USD was appreciating because the fed was raising rates so you can get a better yield on USD cash than on euro or yen cash.  Money flowed toward the yield.  Now the market is convinced the fed is about done, so the money is starting to flow the other way.

I choose to hedge my bets and just own some non-USD bonds (8 to 10% of the port).

It does make sense, when the yields were very low, the money tilted toward the euro and pound.  Now yields go up, the dough flows towards us.  Interesting observation.

It was announced on the news today that the Fed feels inflation is in check, i.e., rates will remain steady.   This is a go sign for the market to move on up, and will keep the real estate bubble inflated for a short.  The RE season will start soon, interesting to see if there is a bust.

jug

 

[brewer12345]

I think the RE goose is cooked. The Fed isn't taking rates back down to 1%, and the mortgage markets are (finally) starting to get scared straight. Once the shakier borrowers start defaulting en masse, we'll know for sure that the party is over. That's when the Fed will really have to cut rates because consumption will drop along with housing.

 

[Howard]

I know of one person who put $50,000 down, got $750,000 Mortgage, and only has to make interest payments. :

 

[brewer12345]

I know of one person who put $50,000 down, got $750,000 Mortgage, and only has to make interest payments. :

In case that isn't scary enough, you could do the same thing and not have to pay even the full interest, plus you could make up ("stated income") income to qualify for the loan. These types of loans are wildly popular in CA.

 

[justin]

I know of one person who put $50,000 down, got $750,000 Mortgage, and only has to make interest payments. :

I was about to add "I know a whole state full of these types people" but Brewer beat me to the punch.

Zero down, wrap the closing costs into the loan, negative amortization, ARM, that should do it.

"But all I needed was 13% annual appreciation, and my house would have made me $400,000 over the next 3 years!" - famous last words of half of California prior to filing for bankruptcy.