Bank Of America Bullish on AUD/JPY

The Australian Dollar/Japanese Yen pair is currently at 64.96 @ 12:51am Central. It hit a high of 70.53 recently when carry trades bounced, however it corrected 10% to 63.36 before seeing some relief today. The question is will the AUD/JPY carry trade see sustained strength going forward? 64-65 is a critical support level and looking at the chart there could be a reverse head and shoulders in the making, which sometimes predicts a reversal. However this is still a very risky trade because Australian Dollars funded in Japanese Yen could still unwind if global economic turmoil continues. Plus the U.S non-farm payrolls number coming out tomorrow will probably be a carry trade catalyst, so watch out (CNBC-Jobs Report 'Is Going to Be Pretty Ugly').

On a bullish note, today Bank Of America's head of global currency strategy, Robert Sinche, predicted a climb of 20% to 80 Yen. He thinks Australia will keep rates above 4% with a potential for 2% real growth, and with a global environment of negative real GDP growth and lower interest rates he feels it is currency supportive. Here's the article: Australian Dollar May Rise 20% Versus Yen, Bank of America Says.



AUD/JPY Chart (Source: FXstreet.com Live Charts)

CNN Debuts Election-Night Hologram Technology, Beams Correspondent

This is crazy, it reminds me of the movie Total Recall.

"CNN "beamed" a correspondent from Chicago to its New York studios Tuesday. Jessica Yellin appeared to be standing before anchor Wolf Blitzer, who queried her. The trick was done with a round green-screen room and 35 high-def video cameras." CNN/Technology

Global Markets Rolling Over After Obama's Win

The market is getting back to reality after Obama's win. Bad news is hitting the wire globally which is smothering any possible reappearance of risk appetite. There was a brief rally in the global equity markets and carry trades leading up to Barack Obama's win, however the markets are now rolling over. Could we test the previous lows? We could, especially if 4th quarter earnings come in worse than expected and unemployment rises dramatically.
Nov. 6 (Bloomberg) -- Analysts are slicing profit forecasts for U.S. companies in the fourth quarter and 2009 as third- period results miss projections at the highest rate in almost 11 years. ``Estimates have been coming down with a vengeance,'' said Dirk van Dijk, director of research at Zacks Investment Research Inc. in Chicago. ``It's just plain ugly out there.'' (Source: Bloomberg)

Today the Dow closed at 9139/-5.05%, S&P at 952.77/-5.27%, and Nasdaq at 1681/-5.53%. Right now at 1:00am, Japan's Nikkei Index is at 8899/-6.53% and China's Hang Seng trades at 13,889/-6.41%. Dow Futures are at 9098/-.08% and S&P futures are at 948.80/-0.9%. So it looks like there could be some weakness going forward in the indices, but lets hope for positive economic numbers. Here's a 3 month chart of the Dow Jones Industrial Average provided free at stockcharts.com


Source: Stockcharts.com


Tonights Bloomberg Headlines:
S&P 500 Profit Estimates Slashed After Third-Quarter Misses
Citigroup, Goldman Said to Begin Firing Staff as Economy Slows
ADP Says U.S. Companies Reduced Payrolls by 157,000
BOJ Helpless as Yen Rises on Carry, UBS, Barclays Say (Update1)
Asian Stocks Fall on Earnings Concerns; News Corp., Isuzu Drop
U.S. Luxury Retailers Face Grimmest Holiday Season (Update2)
Credit Card Bond Sales at Zero, First Time Since 1993 (Update1)
Euro Falls on Speculation ECB Will Cut Rates to Bolster Economy

Thinkorswim Group Valuation, Numbers Look Good But Can They Stick?

I didn't know much about this company until it flooded the internet with online advertising, as well as appeared on the CNBC Portfolio Challenge. They are an online brokerage with award winning software and technology, an investor education unit and even a social networking site. Plus it is run by ex CBOE and investment house traders. So it's an interesting online brokerage company without the quasi-banking problems that E*Trade is facing. I feel a thinkorswim/twitter/stocktwits.com relationship would be very cool if they could be embedded inside the the trading software. The company has also taken advantage of the growing interest in options. Thinkorswim was ranked the best for options traders in Barron's on 3/5/2007.

Sad Day For Ethanol, VeraSun Goes Bust On Corn Futures Implosion


This was a story waiting to happen. Yesterday VeraSun Energy Corp., one of the largest ethanol producers, accounting for 13% of production, went bankrupt. They placed wrong way bets on corn futures, which provided them fixed costs during the 3rd quarter, which eventually put them underwater when corn and ethanol prices crashed. Corn is the underlying component of (corn based) ethanol. VeraSun was already dealing with tight margins, a large amount of debt to service, and competition from lower oil prices. Look at the crash in corn and ethanol prices during the past six months, as well as VeraSun's stock chart. Here is their press release. It's crazy how bubbles just pop out of nowhere. Hopefully oil prices will go back up again so the ethanol bulls can still ride the wave.

Corn Futures (Source: CBOT)

Ethanol Futures (Source: CBOT)


VeraSun Energy Corp. Stock Chart (Source: Stockcharts.com)

Zimbabwe Inflation Rate Hits 231 Million Percent, In Crisis

I think everyone should know about the destructiveness of runaway inflation as it gains momentum. It ruins the value of life! Zimbabwe currently is dealing with a 231 million percent inflation rate, just imagine if that happened to the US. This is the reason why Peter Schiff, Jim Rogers and the gold bugs are bringing up the inflation issue. Below is an excerpt from the 10/10/2008 telegraph.co.uk article about Zimbabwe's 231 million% inflation rate, as well as videos I found on youtube about the growing inflation problem and a man's thoughts on a gold coin solution.

"Zimbabwe inflation hits 231 million per cent: Zimbabwe's inflation has rocketed to an astronomical 231 million per cent, Harare has admitted – an advance of more than 200 million per cent on the previous figure. In June the statistic stood at 11.2 million per cent a year, but the state-owned Herald newspaper said that in July it was more than 20 times higher. Monthly inflation was 2,600.2 per cent, it added. A loaf of bread, which cost Z$500 at the beginning of August, now costs between Z$7,000 and Z$10,000, even when it can be found. The root cause of the country's hyperinflation is the government's policy of printing ever more money to meet its own needs, which has the effect of destroying the Zimbabwe dollar's value in terms of hard currency, sending the cost of anything imported soaring....(telegraph.co.uk)