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Thread: Re: I fund seems like the most complicate fund imaginable.

  1. #1

    Default Re: I fund seems like the most complicate fund imaginable.

    Quote Originally Posted by 350zCommTech View Post
    You need to venture out and explore some of the other members account talk threads. The topic of the Yen has been discussed numerous times.
    Maybe we need a subforum under the I-fund forum, just for currencies??
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Do your own due diligence.


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  3. #2

    Default Re: I fund seems like the most complicate fund imaginable.

    Mass liquidation across the world has caused the dollar to go parabolic. This is why the I fund is down the most.

    Attachment 4954

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  5. Default Re: I fund seems like the most complicate fund imaginable.

    I moved 35% of my TSP into the I fund this summer thinking the worst was over and the dollar weak. Of course it has lost a bundle and now the dollar is almighty. I am thinking of swallowing my loss and moving it back to C. I have a sick feeling in my stomach and don't retire for 6-7 years. Any thoughts? Just can't be sure whether I should ride it out or move to C now with the world economy doing what it's doing. Thanks.

    Gary

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  7. #4

    Default Re: I fund seems like the most complicate fund imaginable.

    Hi garywj2. Welcome to the board.

    I believe the strength in the dollar is here to stay for a while. This is a revaluation of the other currencies, not just a short term trend. The I-fund may see some big positive moves after the huge pounding that the international markets have taken, but the dollar will continue to hold it back, for many months or years, in my opinion.

    You might consider looking for a big rally in the I fund before making a switch.
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Do your own due diligence.

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  9. #5

    Default Re: I fund seems like the most complicate fund imaginable.

    Quote Originally Posted by garywj2 View Post
    Just can't be sure whether I should ride it out or move to C now with the world economy doing what it's doing. Thanks.

    Gary
    Quote Originally Posted by tsptalk View Post

    You might consider looking for a big rally in the I fund before making a switch.
    Welcome to the forum.

    I agree with Tom that when the rally comes, it will bigger in the I fund. The dollar will drop to perhaps the 50dma, before resuming the uptrend.

    As for riding it out in the I fund or the market, I don't know.

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  11. #6

    Default Re: I fund seems like the most complicate fund imaginable.

    Enjoy:

    Europe on the brink of currency crisis meltdown

    The crisis in Hungary recalls the heady days of the UK’s expulsion from the ERM.

    By Ambrose Evans-Pritchard
    Last Updated: 10:52AM GMT 26 Oct 2008

    The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.
    Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.

    “This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.
    Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.

    The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.

    They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles.

    Europe has already had its first foretaste of what this may mean. Iceland’s demise has left them nursing likely losses of $74bn (£47bn). The Germans have lost $22bn.

    Stephen Jen, currency chief at Morgan Stanley, says the emerging market crash is a vastly underestimated risk. It threatens to become “the second epicentre of the global financial crisis”, this time unfolding in Europe rather than America.
    Austria’s bank exposure to emerging markets is equal to 85pc of GDP – with a heavy concentration in Hungary, Ukraine, and Serbia – all now queuing up (with Belarus) for rescue packages from the International Monetary Fund.

    Exposure is 50pc of GDP for Switzerland, 25pc for Sweden, 24pc for the UK, and 23pc for Spain. The US figure is just 4pc. America is the staid old lady in this drama.

    Amazingly, Spanish banks alone have lent $316bn to Latin America, almost twice the lending by all US banks combined ($172bn) to what was once the US backyard. Hence the growing doubts about the health of Spain’s financial system – already under stress from its own property crash – as Argentina spirals towards another default, and Brazil’s currency, bonds and stocks all go into freefall.

    Broadly speaking, the US and Japan sat out the emerging market credit boom. The lending spree has been a European play – often using dollar balance sheets, adding another ugly twist as global “deleveraging” causes the dollar to rocket. Nowhere has this been more extreme than in the ex-Soviet bloc.

    The region has borrowed $1.6 trillion in dollars, euros, and Swiss francs. A few dare-devil homeowners in Hungary and Latvia took out mortgages in Japanese yen. They have just suffered a 40pc rise in their debt since July. Nobody warned them what happens when the Japanese carry trade goes into brutal reverse, as it does when the cycle turns.

    The IMF’s experts drafted a report two years ago – Asia 1996 and Eastern Europe 2006 – Déjà vu all over again? – warning that the region exhibited the most dangerous excesses in the world.

    Inexplicably, the text was never published, though underground copies circulated. Little was done to cool credit growth, or to halt the fatal reliance on foreign capital. Last week, the silent authors had their moment of vindication as Eastern Europe went haywire.

    Hungary stunned the markets by raising rates 3pc to 11.5pc in a last-ditch attempt to defend the forint’s currency peg in the ERM.

    It is just blood in the water for hedge funds sharks, eyeing a long line of currency kills. “The economy is not strong enough to take it, so you know it is unsustainable,” said Simon Derrick, currency strategist at the Bank of New York Mellon.
    Romania raised its overnight lending to 900pc to stem capital flight, recalling the near-crazed gestures by Scandinavia’s central banks in the final days of the 1992 ERM crisis – political moves that turned the Nordic banking crisis into a disaster.

    Russia too is in the eye of the storm, despite its energy wealth – or because of it. The cost of insuring Russian sovereign debt through credit default swaps (CDS) surged to 1,200 basis points last week, higher than Iceland’s debt before Götterdammerung struck Reykjavik.

    The markets no longer believe that the spending structure of the Russian state is viable as oil threatens to plunge below $60 a barrel. The foreign debt of the oligarchs ($530bn) has surpassed the country’s foreign reserves. Some $47bn has to be repaid over the next two months.

    Traders are paying close attention as contagion moves from the periphery of the eurozone into the core. They are tracking the yield spreads between Italian and German 10-year bonds, the stress barometer of monetary union.
    The spreads reached a post-EMU high of 93 last week. Nobody knows where the snapping point is, but anything above 100 would be viewed as a red alarm. The market took careful note on Friday that Portugal’s biggest banks, Millenium, BPI, and Banco Espirito Santo are preparing to take up the state’s emergency credit guarantees.

    Hans Redeker, currency chief at BNP Paribas, says there is an imminent danger that East Europe’s currency pegs will be smashed unless the EU authorities wake up to the full gravity of the threat, and that in turn will trigger a dangerous crisis for EMU itself.
    “The system is paralysed, and it is starting to look like Black Wednesday in 1992. I’m afraid this is going to have a very deflationary effect on the economy of Western Europe. It is almost guaranteed that euroland money supply is about to implode,” he said.

    A grain of comfort for British readers: UK banks have almost no exposure to the ex-Communist bloc, except in Poland – one of the less vulnerable states.

    The threat to Britain lies in emerging Asia, where banks have lent $329bn, almost as much as the Americans and Japanese combined. Whether you realise it or not, your pension fund is sunk in Vietnamese bonds and loans to Indian steel magnates. Didn’t they tell you?
    http://www.telegraph.co.uk/finance/c...-meltdown.html

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  13. #7

    Default Re: I fund seems like the most complicate fund imaginable.

    Since trading began this afternoon, the USD/YEN tanked again, down to 91. And the dollar is on the rise again. More of the same basically.

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  15. #8

    Default Re: I fund seems like the most complicate fund imaginable.

    G-7 hints at possible concerted Yen manipulation.

    This article suggests the manipulation might start when the USD/YEN falls below 90. It's currently 93. That is only 4% away. The effects of this manipulation will cause a rally in the markets, but it will be short lived. How the long the rally will last I don't know. Reality of the global recession will eventually set in, and back down the market goes.

    G-7 Warns on Yen's Gain; Japan Ready to Take Action (Update2)

    By Keiko Ujikane and Jason Clenfield

    Oct. 27 (Bloomberg) -- The Group of Seven industrialized nations expressed concern about ``excessive gains'' by the yen after Japan's currency soared to a 13-year high against the dollar.

    The G-7 made an unscheduled statement after a request from Japan, Finance Minister Shoichi Nakagawa said, adding that his government was ready to act if needed. The G-7 fell short of pledging concerted action to halt the yen's advance. Separately, Prime Minister Taro Aso said he'd draft measures to help counter the financial crisis.

    Japan's Nikkei 225 Stock Average has plummeted 33 percent this month as the soaring yen erodes earnings of exporters such as Sony Corp. The yen has gained as the risk of a global recession and an extended slump in the world's stock markets prompted investors to sell assets bought by borrowing in Japan, where interest rates are the lowest among industrial nations.

    ``The Japanese authorities must have thought it was important to address this as a shared G-7 concern,'' said Tomoko Fujii, head of economics and strategy at Bank of America Corp. in Tokyo. ``Otherwise the markets would think this is a Japan- specific problem that would make any unilateral'' selling of the yen by Japan less effective.

    The yen traded at 94.12 per dollar as of 1:40 p.m. in Tokyo compared with 93.80 shortly before Nakagawa read out the G-7 statement.

    The yen last week rose to a 13-year high against the dollar, while currencies of Canada, Australia, the United Kingdom and New Zealand sank by more than 5 percent.

    Global Recession
    ``Many market participants are forced to liquidate their positions,'' said Fujii. ``It's unwanted liquidations because of risk reduction and hedge-fund redemptions and dollar shortages.''
    Sony, the world's second-largest consumer electronics maker, last week cut its full-year profit forecast by 38 percent because of the stronger yen.

    The proposals Japan's government is considering include a resumption of state purchases of shares owned by Japan's banks, said Hakuo Yanagisawa, a ruling Liberal Democratic Party lawmaker charged with dealing with the financial crisis. The decline in the stock market has eroded the value of shares banks hold as part of their capital.

    Bank Stocks Tumble
    Japanese banks tumbled on the Tokyo Stock Exchange today after media reports said they may seek to raise extra capital to offset unrealized losses on shareholdings. Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. sank more than 10 percent.

    ``We reaffirm our shared interest in a strong and stable international financial system,'' the G-7 statement said. ``We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability. We continue to monitor markets closely, and cooperate as appropriate.''

    The ``unusual'' statement indicates policy makers are one step closer to international currency intervention, said Takahide Kiuchi, chief economist at Nomura Securities Co. in Tokyo. ``If the yen appreciates below 90 yen, that may trigger a move.''


    Japan hasn't sold its currency since March 2004 when the yen was trading at 103.42 against the dollar. The Bank of Japan, acting on behalf of the Ministry of Finance, sold 14.8 trillion yen ($157 billion) in the first three months of 2004, after record sales of 20.4 trillion yen in 2003.

    To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net Jason Clenfield in Tokyo at jclenfield@bloomberg.net
    http://www.bloomberg.com/apps/news?p...cPE&refer=home

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  17. #9

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    Default Re: I fund seems like the most complicate fund imaginable.

    Gary....! Since the I fund fell the most....I believe it will rise the most; but the Japanese (mkt down in Asia today Monday) Yen is down...and Japan I think comprises 25% of I fund...(check that figure out) Japan is in bad shape right now. The dollar is on the move up so if you were thinking it was going to go down and banking on that to stay in the I fund forget it and for that reason I would not stay there. I think we in the US...S& P and S fund will come back sooner than I; but I will eventually rise but much more slower. I actually don't know what I would do if I was you. I'd probably hold onto I for now; however it may take longer than C or S funds to come back as our mkt went down first. I've been in G fund making no money but losing none. I'm close to moving into the C fund although members think S is better for some reason. Good Luck! I'm retired in Asia.
    Last edited by mick504; 10-27-2008 at 02:28 AM. Reason: crappy writing


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  19. #10

    Join Date
    Nov 2008
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    Virginia
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    Default Re: I fund seems like the most complicate fund imaginable.

    The only currencies worth buying are the British Pound and the Euro. They are the only stable currencies beating the dollar buy a long shot.

    Jason

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  21. #11

    Default Re: I fund seems like the most complicate fund imaginable.

    Quote Originally Posted by rawiron1 View Post
    The only currencies worth buying are the British Pound and the Euro. They are the only stable currencies beating the dollar buy a long shot.
    Hi rawiron1 -

    They aren't doing too well either lately. Both the euro and BP are down over 22% since July.
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Do your own due diligence.

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  23. #12

    Default Re: I fund seems like the most complicate fund imaginable.

    Quote Originally Posted by rawiron1 View Post
    The only currencies worth buying are the British Pound and the Euro. They are the only stable currencies beating the dollar buy a long shot.

    Jason
    Quote Originally Posted by tsptalk View Post
    Hi rawiron1 -

    They aren't doing too well either lately. Both the euro and BP are down over 22% since July.
    For now, the trend for the dollar is up. Europe and the UK are worst off then we are. When the market finds a bottom, the trend will change and the dollar will fall against the Euro and the Pound.

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