Central bank going to have to eat those put options it sold!

tejasmarcos says on Feb 26, 2008, 07:25:

jesus! i am not believing this BS........

trying to walk a straight line on sour mash and cheap wine...

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podborski says on Feb 26, 2008, 07:54:

they sold puts on the dollar or the peso? sure you have it right?

what was the strike price they got exercised at?

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jh816 says on Feb 26, 2008, 10:45:

They sold put options on the dollar. This gives the buyer the right to sell dollars. It looks like the strike price they are using is the 20-day moving average. The day they sold the options, the peso weakened to 1915 from 1905 the day before. I haven't calculated what the 20-day would be, but a guess would be a little over 1900.

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LDW says on Feb 26, 2008, 11:03:

The Federal Reserve has a real problem: Do they raise interest rates to restrain inflation, and thereby choke the economy? Or do they keep interest rates low to try to spur the economy, thereby fueling inflation? I think they will opt for the latter.

http://www.msnbc.msn.com/id/23352078

It looks to me like we are headed for stagflation, which means a period of high inflation and low economic growth. What it amounts to is that the US government is paying back its huge deificit with printed money. That means a cheaper dollar, and just about every other currency (including the Colombia peso....Colombia exports commodities) being stronger than the dollar.

This is the legacy of baby Bush (the Shrub I call him), and his blunder of going into Iraq and kissing the ass of the Saudi Royal Family. We will be paying for that for years.

I guess that means we should buy gold.

http://www.msnbc.msn.com/id/23349559

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DodgerDogs says on Feb 26, 2008, 11:28:

The U.S. Dollar is keeps getting weaker. Gone for good , are the 2,000 COP to 1 US dollar.

NEW YORK - Feb 26 ,2008 No good news today on the economic front. Consumer confidence plunged, the wholesale inflation rate soared, the number of homes being foreclosed jumped, home prices fell sharply and a report predicts big increases in health care costs.

Consumer confidence weakened significantly as Americans worry about less-favorable business conditions and job prospects. The New York-based Conference Board says in a report released on Tuesday that its Consumer Confidence Index plunged in February to 75.0 from a revised 87.3 in January.

The reading — the lowest since the index registered 64.8 in February 2003 — is far below the 83.0 analysts expected.

The index measures how consumers feel now about the economy. It has been weakening since July, suggesting that wary consumers may retrench financially, which could fatigue the economy further.

Inflation at the wholesale level soared in January, pushed higher by rising costs for food, energy and medicine. The monthly increase carried the annual inflation rate to its fastest jump in a quarter century.

The Labor Department said Tuesday that wholesale prices rose 1 percent last month, more than double the 0.4 percent increase that economists had been expecting.

The January surge left wholesale prices rising by 7.5 percent over the past 12 months, the fastest pace in more than 26 years, since prices had risen at a 7.5 percent pace in the 12 months ending in October 1981.

The number of homes facing foreclosure jumped 57 percent in January compared to a year ago, with lenders increasingly forced to take possession of homes they couldn't unload at auctions, a mortgage research firm said Monday.

Nationwide, some 233,001 homes received at least one notice from lenders last month related to overdue payments, compared with 148,425 a year earlier, according to Irvine, Calif.-based RealtyTrac Inc. Nearly half of the total involved first-time default notices.

The worsening situation came despite ongoing efforts by lenders to help borrowers manage their payments by modifying loan terms, working out long-term repayment plans and other actions

U.S. home prices lost 8.9 percent in the final quarter of 2007, Standard & Poor's said Tuesday, marking a full year of declining values and the steepest drop in the 20-year history of its housing index.

"We reached a somber year-end for the housing market in 2007," said one of the index's creators Robert Shiller. "Home prices across the nation and in most metro areas are significantly lower than where they were a year ago. Wherever you look things look bleak."

The S&P/Case-Shiller home price indices, which include a quarterly index, a 20-city index and a 10-city index, reflect year-over-year declines in 17 metropolitan areas with double-digit declines in eight of them.

By 2017, total health care spending will double to more than $4 trillion a year, accounting for one of every $5 the nation spends, the federal government projects.

The 6.7 percent annual increase in spending — nearly three times the rate of inflation_ will be largely driven by higher prices and an increased demand for care, the Centers for Medicare and Medicaid Services said Monday. Other factors in the mix include a growing and aging population. The first wave of baby boomers become eligible for Medicare beginning in 2011.

With the aging population, the federal government will be picking up the tab for a growing share of the nation's medical expenses. Overall, federal and state governments accounted for about 46 percent of health expenditures in 2006. That percentage will increase to 49 percent over the next decade.
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Colombia's Peso Rises to Eight-Month High on Rates, Investment

By Andrea Jaramillo

Feb. 26 (Bloomberg) -- Colombia's peso climbed to an eight-month high as rising interest rates and an increase in commodity exports buoyed dollar inflows.

Colombia's central bank raised the key lending rate a quarter percentage point to 9.75 percent on Feb. 22, luring capital to the fixed-income market, in an effort to stem inflation. The 6.75 percent rate differential between Colombian and U.S. benchmark rates is the widest since January 2002.

``In Latin America, the general trend is for rates to rise on the back of quickening inflation, while the U.S. continues to cut its benchmark rate,'' said Benito Berber, a macro-strategist at RBS Greenwich Capital Markets in Greenwich, Connecticut. ``In the case of Colombia, we're also seeing strong foreign direct investment.''

The peso advanced for a second day, gaining 0.8 percent to 1,871.01 per dollar at 12:51 p.m. in New York, according to the Colombian foreign-exchange electronic transactions system, known as SET-FX. The currency touched 1,870 per dollar, its strongest level since June 1. The peso's 7.8 percent advance this year is the second-biggest after the Czech koruna among 26 emerging market currencies tracked by Bloomberg.

Futures contracts on the Chicago Board of Trade indicate traders see an 86 percent likelihood the Federal Reserve will lower its benchmark rate a half-point to 2.5 percent at its March 18 meeting and a 14 percent chance of a quarter-point reduction.

Rising Investment

Crude oil prices, which are up 61 percent from a year ago, have boost exports and attracted investment into the South American country. Oil accounts for about 20 percent of Colombian exports.

Foreign direct investment jumped 46 percent to $6.53 billion in the first nine months of 2007, according to the central bank. Forty percent of that investment was earmarked for the oil industry. Direct investment has totaled $1.45 billion this year, central bank general manager Jose Dario Uribe said last week.

The yield on Colombia's benchmark 11 percent bonds due July 2020 rose 1 basis point, or 0.01 percentage point, to 11.36 percent, according to Colombia's stock exchange. The bond's price fell 0.056 centavo to 97.528 centavos per peso.

Peru's sol rose 0.1 percent to 2.8945 per dollar, remaining near a nine-year high. The currency yesterday touched 2.892, its highest since July 1998. The yield on Peru's 8.6 percent sol-denominated bonds due in 2017 rose 3 basis points to 6.48 percent, according to Interbank SA.

Chile, Argentina, Venezuela

Chile's peso advanced 0.3 percent to 465.24 per dollar from 466.82 yesterday.

The yield on Argentina's 5.83 percent inflation-linked peso bonds due in 2033 fell 5 basis points to 8.44 percent, according to Citigroup Inc.'s unit in Argentina. The peso fell 0.02 percent to 3.1585 per dollar.

Venezuela's bolivar was little changed at 4.85 per dollar in the unregulated market, traders said. The government pegs its currency at an official exchange rate of 2.15 per dollar under restrictions imposed in 2003. Venezuelans turn to the parallel market when they can't get approval from the government's Foreign Exchange Administration Commission to buy dollars at the official rate.
___________________________________________________________________

Get ready for a 1,500 Cop to 1 U.S. Dollar , as it is heading that way.

Our lives begin to end the day we become silent about things that matter.Martin Luther King:

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rocinante says on Feb 26, 2008, 12:02:

Central Bank will most likely close their positions by buying puts if they have not already done so.

The strike priceS and expiration dateS are not known and varried. The Bank took action and sold contracts on existing open interest, as per the original article. Although I'm sure there were some parameters (only USD180million of USD515million were filled) knowledge of this information matters little.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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podborski says on Feb 26, 2008, 16:06:

I saw a headline on bloomberg that Jim Rogers thinks the dollar is close to bottom?

He's been very right for a long time.

I'll be buying dollars soon with my high flying loonies : )

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wendell13 says on Feb 26, 2008, 16:25:

you could be right....everybody and their uncle are bashing the dollar. That could be a sign that a bottom is close.

Rogers has been right more often than wrong

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podborski says on Feb 26, 2008, 16:31:

I didn't read what Rogers said, maybe he's calling for a short term bounce or something?

But I sure think the whole world expects the dollar to keep falling, and on that alone I'd be willing to buck the trend

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podborski says on Feb 26, 2008, 16:31:

as soon as a taxi driver here tells me to short the dollar I'm going long

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rocinante says on Feb 26, 2008, 17:01:

Jim Rogers is a genius. He said what when? Less than 4 months ago he talks about a rally in the dollar. Maybe he was talking bout the bootom in terms of a small rally he predicts. Was he talking about the rally?

http://www.youtube.com/watch?v=airxvVmGnqc&NR=1




"Let them go bankrupt"

at 3:00

"Every time the fed turns around to save its friends on Wall Street it makes the situation worse.... let some people go bankrupt, that's what capitalism is"

6:00 "it's not the Fed's position to bail out Wall Street"

http://www.youtube.com/watch?v=mMpqSDM6SRo&feature=related

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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podborski says on Feb 26, 2008, 17:03:

I'm going to go look on bloomberg for it roci, I just saw the headline...

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podborski says on Feb 26, 2008, 17:08:

here's a link Roci, looks like he says a short term rally before going even lower:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aQzSSg9fdHJg

Much as I respect the guy...I think he's maybe just riding the trend too far.

But what do I know, he's the zillionaire.

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rocinante says on Feb 26, 2008, 17:12:

Thanks pod, I will read the article later - he's talking about that short term rally. Most likely against the Euro, China, Yen.

The headline "Jim Rogers Says Dollar to Rally This Year Before Further Slump "

He talked about this rally back in October.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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podborski says on Feb 26, 2008, 17:16:

what I really like about him (besides being a contrarian) is he sticks to his views, doesn't change them every time the market wobbles

wish I had listened to him more.

I clearly recall him talking about zinc, lead, exciting things like that, what, 10 years ago?

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rocinante says on Feb 26, 2008, 17:22:

Short article: "Jim Rogers, co-founder of the Quantum Hedge Fund with George Soros, said he expects the dollar to advance this year and will use any gains to sell his remaining investments linked to the U.S. currency. "

This is Fench for minimal gains against the big currencies based on the technical analysis:

"Nothing goes in straight lines every quarter."

He's waiting to take less of a bath on his US investments. Everyone has been waiting for this rally. Will it ever come? If NOT the dollar is screwed; if YES the dollar will be screwed because everyone who has been sitting tight is going to be unloading during the bump/rally.

Either way beta here is low regaring the COP and either way he is still saying slump long term. Many here are in the COP for the long haul - hasta la muerte.

For someone as heavily invested as Rogers, small short term moves equate to hundreds of millions of dollars - for you and I the 3%-12% is small potatos and then before you know it it's reversing.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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rocinante says on Feb 27, 2008, 06:33:

Peso at 1859 to the USD 9:23 EST

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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RAAAY says on Feb 27, 2008, 06:45:

Roc.........what source are you using for that..?

.........Its useless to argue with ignorance

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rocinante says on Feb 27, 2008, 07:25:

1852 at 10:23

Your 1865 is looking too optimistic. Better luck next time!

http://www.bloomberg.com/markets/currencies/americas_currencies.html

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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podborski says on Feb 27, 2008, 07:55:

hey is anyone keeping track of that bet we all had? Loid?

I think I'm losing....

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pedro says on Feb 27, 2008, 08:09:

Didn't GIB have bets open with various people? He was stridently bullish on the dollar.

I wonder how they're going, now that his posts are all deleted.

que nota!

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rocinante says on Feb 27, 2008, 08:14:

We had bets on this but more for bragging not for any money. With the edit feature we are open for shenanigans.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

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gringoloid says on Feb 27, 2008, 12:46:

i'll put all the "Peso Sweepstakes" info together later........you guys turned me into another direction with 911 issues....................hope there will be more participation.........

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Ctg Bound says on Feb 27, 2008, 14:30:

jh816, we don't have enough information regarding the Colombian central bank sales of put options, that I have read at least.

They could have replaced them with others and just sold the ones due to time decay in the options.

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jh816 says on Feb 27, 2008, 14:47:

Posted a website that explains their policies on a previous post. It appears that if the 20-day moving average falls to the point that the options are exercised, the central bank just sells rolls over the options (sells a new batch with the new moving average) to pay for the call on the other ones. The trouble is, with selling options, if the price on the asset moves by a great deal (like the moving average has done since they sold the options) the exercised options will cost a chitload.

It would make sense that when they saw the wholesale inflation number in the US and some of the economic reports a few days ago, that they would have gotten out of the positions or entered into an offsetting one, but who knows with bureacrats. I can just see the central bank sitting on their butts because something hasn't been formalized in policy or a million documents haven't been signed and passed to everyone and their brother to authorize the transaction. So goes government in Colombia.

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pedro says on Feb 27, 2008, 16:01:

JH, they are not trying to trade those options for a profit. That's not the point of these transactions.

Central banks intervene in currencies all the time. They want to smooth out the volatility, or try and support the exchange rate towards a particular target rate.

They will hand in results showing huge net gains or losses, but that's beside the point.

que nota!

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jonas says on Feb 27, 2008, 17:00:

NEW YORK, Feb 22, 2008 /PRNewswire-FirstCall via COMTEX/ -- NMX | news | PowerRating | PR Charts -- The New York Mercantile Exchange, Inc. announced today that it would delay the launch of its Colombian Peso futures contract from the previously announced launch date of February 25, 2008, due to finalization of arrangements with the Colombian regulatory authorities. A new launch date will be announced when it is available.

Forward Looking and C

What I have, I do not want to lose, but Where I am I do not want to stay, but those I love, I do not want to leave, but those I know I no longer want to see, but Where I die, I do not want to go;I want to stay where I have never been

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