Stocks and Dollars

The PBoC has announced that the reserve requirement ratio (RRR) for commercial banks will be cut by 50bp across the board. The implication is that the RRR will be cut from 21.5% to 21.0% for the major commercial banks and by 50bp to 19% for small banks. For the market,

Firstly there was China’s RR cut this morning then along came lunchtime in London and the big news hit: the Fed, the ECB, BOJ, SNB, Bank of Canada and BOE have lowered USD swap rates by 50 basis points effective from December 5th.

Added to this access to dollar swap lines

With the risk-on trading that is taking place this week, the USD/CAD failed to extend last week’s rally. Isntead it follows through with a downside break below a rising trendline see in the 4H chart. The slide is sharp, and is now breaking below the 200 period simple moving average

The EUR/USD has been consolidating since the start of the week. Here in the 11/30 US session, we have a very sharp corrective rally. This moves the pair above 78.6% retracement at 1.3490, and broke the 1.35 psychological resistance. This sharp move also pushes above the 200SMA, the 1.34 resistance cluster, and now above 1.35.

By ETF Prophet:

By Engineering Returns

Traders seek to find the next big thing along the lines of Apple (AAPL), Baidu.com (BIDU), etc. Oftentimes this desire is founded by the underlying assumption that taking higher risk is rewarded with higher returns. Furthermore many traders believe in an efficient market whereas one can outperform the market only by taking above average risk. However this hasn’t been the case for the US stock market over the last couple of decades or so. A lot has been written about the low-volatility anomaly in financial markets. With this post I want to share some insight into how this works out on key index stocks over various time frames.

The Setup

For my research I define risk in terms of historical volatility. I looked into S&P 100 and S&P 500 stocks (survivorship bias free) from Jan. 1990 until Nov. 2011. Stocks are ranked by historical volatility of various

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By Doug Carey:

It is generally well known that dividend payments from most stocks tend to move up and down with the rate of inflation. Many investors choose dividend stocks just for this reason, and this can be a good strategy for hedging against inflation. Unlike with fixed income, companies can change the dividend payment at any time and we would expect that if nominal revenues are increasing due to inflation, then the dollar dividend payout should increase as well.

But there is a problem with some of the analysis out there when it comes to just how much one can hedge using dividends

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Stocks soared in morning trading Wednesday after major central banks acted together to support the global financial system by cutting short-term borrowing rates.The Dow Jones industrial average jumped …

Despite intra-day fall to 77.29, as the greenback found support there and has rebounded, suggesting consolidation with upside bias would be seen and test of the convergence of Tenkan-Sen and Kijun-Sen (now both at 77.73) would be seen, however, above the Ichimoku cloud (now at 77.83-90) is needed to retain