It seems like there is no end to bailout campaign. Today it was Citigroup who called on Uncle Sam for helping hand. This time around they are getting $20 billion on top of $25 billion received earlier. In addition, government also will guarantee a mountain of Citi’s potentially loosing assets. Here are the details as reported by Associated Press.
“As part of the plan, Treasury and the FDIC will guarantee against the “possibility of unusually large losses” on up to $306 billion of risky loans and securities backed by commercial and residential mortgages.
Under the loss-sharing arrangement, Citigroup Inc. will assume the first $29 billion in losses on the risky pool of assets. Beyond that amount, the government would absorb 90 percent of the remaining losses, and Citigroup 10 percent. Money from the $700 billion bailout and funds from the FDIC would cover the government’s portion of potential losses. The Federal Reserve would finance the remaining assets with a loan to Citigroup.
In exchange for the guarantees, the government will get $7 billion in preferred shares of Citigroup. In addition, Citi said it will issue warrants to the U.S. Treasury and the FDIC for about 254 million shares of the company’s common stock at a strike price of $10.61.”
$300 billion for one bank? I just hope that our financial authorities REALLY know what they are doing, or all this might lead to a forced devaluation of dollar. Or, perhaps, it is a goal, since chances of repaying federal debt in today’s dollars are rapidly falling into low order of probabilities. I’m going to leave this topic alone for now. There will be plenty more opportunities to discuss it later.
Trade from yesterday, CAD-JPY long position, worked out as planned.
Entry was at 76.50 and target of 78.20 was reached very fast. Nice 170 pips. I only wish all trades were like this…. Canadian Dollar had some day, gained about 500 pips against USD. There were no gaps at the open to speak of, so I have to wait till next week for some of those.
I’m taking a look at NZD-CHF, cross that is mostly overlooked by traders. It doesn’t move as much as, say JPY pairs, so the objective is less ambitious here.
I expect an upside breakout and placed an order at 0.6605. Target is at 0.6680. Chances are that from now on things will quiet down, due to Thanksgiving in a few days. I’m not saying, that there will be no moves, but rather moves will likely get smaller. Tomorrow might be last day worth trading this week.
Mike K.
I’m glad that I now follow your blog. There are too few good blogs to read, especially forex blogs.
btw. I don’t know do you know that I can in my feed reader only see a paragraph of your post and without pictures. Maybe you want it like that and you put rss feed settings that way, but I’m too used to follow blogs in google reader and not jump from site to site.
For me it’s great to get some longer term perspective because I’m to much in my scalp trading world.
Anyway great blog.
Thank you for your kind comment. I’ll look into the feed issue, but when I saw the links somewhere else, there was a picture of most recent chart. Frankly, I’m not very good with this part of blogging, like the settings and so on. This might have wait untill I find some kind soul to give me a hand.
I took this trade in CAD-JPY with you. Price moved so fast that I took profits after 77 pips. I thought I would reenter later. Now I’m kicking myself. Great trade.
Yesterday I spent some time and over a lot of your older posts. I noticed that you don’t talk about us dollar too much. Why is that? Is dollar too difficult to trade? I’m new to forex trading so please don’t get annoyed with my questions.
Michelle, waiting for either a trade or trade outcome is most difficult part of trading. Since very few trades happens as easily as this one, there is always a matter of double guessing yourself. Everybody goes through it. It comes with experience and choosing trading time frame most suitable to your personality.
Nothing wrong with your question, Renata. I also trade USD pairs, but for this blog I try to choose non USD crosses. Dollar gets more than enough coverage, while other currencies don’t. I still post an occasional dollar trade here.