October 22, 2010

Market Wrap: for the week ending 22-Oct-2010

• US dollar rose modestly ahead of G20 meeting of finance ministers and central bankers (WSJ)
• Tim Geithner urges G20 countries not to devalue their currencies (FT)
• Fannie Mae and Freddie Mac may end up drawing $363B from the government (Bloomberg)
• US Leading Economic Index increased 0.3% in September to 110.4 (Conference Board)
• Bank of Canada announced it would hold its key overnight interest rate steady at 1% (WSJ)
• China's economy grew 9.6% in Q3, the slowest pace in a year and in-line with expectations (WSJ)
• German government sees GDP growth of 3.4% in 2010 (Marketwatch)
• China is said to widen its embargo of rare earth minerals (NY Times)
• China raised its benchmark deposit and lending rates by 25 basis points (WSJ)
• Japan's government cut its economic outlook for the first time since February 2009 (CNBC)

Weekly Market Barometers    
stock-2010-10-22   fx-2010-10-22

Chart Of The Week
The foreclosure mess hit the airwaves in recent weeks.  Below is a nice graphic showing the impact of foreclosures across the US.  After all, foreclosures too seem to be bound by the three most important determinants in real estate:  Location, location, location.

source: Washington Post

Recommended Read 
We have covered the pros and cons of using a mortgage on a property as a cash chow at length.  If you like to review some of the previous articles, you can find all of them under the real estate label on our blog: FXIS/Real_Estate 

However, to get a good sense of what really happened in the past ten years and to understand some of the caveats going forward, please consider this excellent piece by David Kotok: The Foreclosure Mess

Recommended Video 
Tim Geithner appears to have this rare talent of making a poor impressions and coming across as hypocritical. First impressions do matter; during his confirmation hearings prior to taking the post of US treasury secretary, the general public had to question whether he was incapable of completing his own tax returns or whether he was simply “bending the truth”.  Either scenario does not bode well for one of the most important finance jobs in the country.

This week, Tim Geithner did it again. In a letter to the G20 members he asked the nations “to refrain from exchange rate policies designed to achieve competitive advantage by either weakening their currency or preventing appreciation of undervalued currency."  Well hello Mr. Geithner, what has the US been doing all along?

Please consider the following discussion between Henry Blodget and Aaron Task which sheds some additional lights on the motives of Mr. Geithner.

Good luck and good investing!

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