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- Post #2,141
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- Feb 22, 2017 2:39pm Feb 22, 2017 2:39pm
- | Joined Oct 2016 | Status: Member | 518 Posts
- Post #2,142
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- Feb 22, 2017 2:57pm Feb 22, 2017 2:57pm
- | Commercial Member | Joined Dec 2014 | 11,709 Posts | Online Now
PERFECT TIMING KeepCalmfx
This morning I posted what was going on with EUR/USD.
Just before NOON today, NOON EASTERN STANDARD TIME as happens EVERY DAY , Monday to Friday , Europe goes home as it relates to Europe and the Equity Markets. By NOON , the BIG Commercial Forex Traders go home. Of course the FOMC Minutes only come out 2 hours later so the SPIKE UP was CLEARLY SHORT COVERING.
It was NOT about the Politics in France as that news had been out for hours.
Here is a RECENT EXCELLENT CHART with comments on EUR/USD that I just copied from the POPULAR EUR/USD Thread.
NEWS MOVES MARKETS. FUNDAMENTALS MOVE MARKETS. MONEY FLOW MOVES MARKETS.
THE CHARTS "DO NOT" move markets they just take pictures of it or as I call it an X RAY !!!
Here is the chart and now you know.
sakisf
This morning I posted what was going on with EUR/USD.
Just before NOON today, NOON EASTERN STANDARD TIME as happens EVERY DAY , Monday to Friday , Europe goes home as it relates to Europe and the Equity Markets. By NOON , the BIG Commercial Forex Traders go home. Of course the FOMC Minutes only come out 2 hours later so the SPIKE UP was CLEARLY SHORT COVERING.
It was NOT about the Politics in France as that news had been out for hours.
Here is a RECENT EXCELLENT CHART with comments on EUR/USD that I just copied from the POPULAR EUR/USD Thread.
NEWS MOVES MARKETS. FUNDAMENTALS MOVE MARKETS. MONEY FLOW MOVES MARKETS.
THE CHARTS "DO NOT" move markets they just take pictures of it or as I call it an X RAY !!!
Here is the chart and now you know.
sakisf
- Joined Sep 2013 | Status: puppy | 2,135 Posts | Invisible
Cleanup Report: Post #1,092,691 by sakisf
Rest till fomc in the blue square area then depending on fomc 1.0644 directly or start the move to 1.0380.
Didn't take trades at 1.0495 as per my plan due to weakness, but did EG longs from .84-.8450, exited just now at .8480 thanks to French spike. These French news could be the catalyst for a slow move up from now on in EU. Also Greek deal coming soon to fruition.
Attached Image (click to enlarge)
http://www.forexfactory.com/attachme...1&d=1487783708
1
Benjaminis
2
- Post #2,143
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- Feb 22, 2017 3:01pm Feb 22, 2017 3:01pm
- | Commercial Member | Joined Dec 2014 | 11,709 Posts | Online Now
Another Chart from Earlier today. For some reason now I cannot even EDIT my own posts so that is why I am including it in a new post. Thanks for updating the charts , KeepCalmfx.
http://www.forexfactory.com/attachme...1&d=1487773004
Benjaminis
http://www.forexfactory.com/attachme...1&d=1487773004
Benjaminis
1
- Post #2,144
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- Feb 22, 2017 6:33pm Feb 22, 2017 6:33pm
- | Commercial Member | Joined Dec 2014 | 11,709 Posts | Online Now
- Post #2,145
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- Feb 22, 2017 7:23pm Feb 22, 2017 7:23pm
- | Commercial Member | Joined Dec 2014 | 11,709 Posts | Online Now
1
- Post #2,146
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- Feb 23, 2017 5:51am Feb 23, 2017 5:51am
- | Joined Oct 2016 | Status: Member | 518 Posts
Good Day
Hope everyone is doing well.
I think this is a nice explanation on how to read risk off or risk on. This is a old article (2011), that I found on FXCM's website. I believe we can still use the concept of this article and take into consideration what Benjamin teach us here? Is this correct Benjamin?
How to Read Risk OFF or Risk ON Sentiment
The market sentiment seems to flip flop back and forth on a daily basis between a Risk On and a Risk Off. Reading Risk Sentiment is as simple as following the direction of the US Stock Market.
Each day, it seems a new rumor is produced and the stock markets shifts accordingly. The seesaw action can take a toll on a traders emotions.
One way to gauge an underlying trend in the market is through the risk appetite of investors. The benefit of understanding the mood of the market is it allows you to align your trades in the direction of the market sentiment.
When you see the stock market increase significantly, that is an indication that risk is on. A risk on environment is a mood of the market where investors feel good about the future prospects of the economy. Therefore, they take their capital and speculate in the stock market and high yielding instruments. This generally increases the value of the stock market and high yielding currencies.
At the same time, low yielding instruments tend to gain less on a relative basis or possibly even lose value. Low yielding currencies tend to be sold to fund the purchase of a higher yielding currency. This selling of a low yielding currency while simultaneously buying a high yielding currency is called the Carry Trade. So an effect of a risk on sentiment is an increase in the stock market and demand for high yielding currencies. As a result the Carry Trade strategy tends to perform well. (See additional resources below for more information on the Carry Trade Strategy.)
In the chart above, since the AUD has historically been a high yielding currency, when the risk sentiment was ON (Green shaded areas) the AUD/USD exchange rate was likely to rise and the carry trade strategy worked well. When the risk sentiment turned OFF (pink shaded areas) the AUD/USD exchange rate tended to fall and the carry trade strategy would not have performed inconsistently.
When you see the stock market fall that is labelled as risk off in the media. That means investors and traders are averse to riskthey want to avoid risk and risky instruments. Therefore, the investors pull their money out of stocks by selling their shares and sell their risky instruments like high yielding currencies. In a risk off market mood, the carry trade does not work.
Although a trader is gaining a daily dividend, the movement of the exchange rates is so adverse that is wipes out any interest gains.
In a risk off environment, traders are better served buying safe haven currencies.
The risk assets like the US Stock market and high yielding currencies like the AUD are near resistance levels. This may mean a return to risk aversion and a selloff in the stock market and AUD/USD.
Hope everyone is doing well.
I think this is a nice explanation on how to read risk off or risk on. This is a old article (2011), that I found on FXCM's website. I believe we can still use the concept of this article and take into consideration what Benjamin teach us here? Is this correct Benjamin?
How to Read Risk OFF or Risk ON Sentiment
The market sentiment seems to flip flop back and forth on a daily basis between a Risk On and a Risk Off. Reading Risk Sentiment is as simple as following the direction of the US Stock Market.
Each day, it seems a new rumor is produced and the stock markets shifts accordingly. The seesaw action can take a toll on a traders emotions.
One way to gauge an underlying trend in the market is through the risk appetite of investors. The benefit of understanding the mood of the market is it allows you to align your trades in the direction of the market sentiment.
When you see the stock market increase significantly, that is an indication that risk is on. A risk on environment is a mood of the market where investors feel good about the future prospects of the economy. Therefore, they take their capital and speculate in the stock market and high yielding instruments. This generally increases the value of the stock market and high yielding currencies.
At the same time, low yielding instruments tend to gain less on a relative basis or possibly even lose value. Low yielding currencies tend to be sold to fund the purchase of a higher yielding currency. This selling of a low yielding currency while simultaneously buying a high yielding currency is called the Carry Trade. So an effect of a risk on sentiment is an increase in the stock market and demand for high yielding currencies. As a result the Carry Trade strategy tends to perform well. (See additional resources below for more information on the Carry Trade Strategy.)
In the chart above, since the AUD has historically been a high yielding currency, when the risk sentiment was ON (Green shaded areas) the AUD/USD exchange rate was likely to rise and the carry trade strategy worked well. When the risk sentiment turned OFF (pink shaded areas) the AUD/USD exchange rate tended to fall and the carry trade strategy would not have performed inconsistently.
When you see the stock market fall that is labelled as risk off in the media. That means investors and traders are averse to riskthey want to avoid risk and risky instruments. Therefore, the investors pull their money out of stocks by selling their shares and sell their risky instruments like high yielding currencies. In a risk off market mood, the carry trade does not work.
Although a trader is gaining a daily dividend, the movement of the exchange rates is so adverse that is wipes out any interest gains.
In a risk off environment, traders are better served buying safe haven currencies.
The risk assets like the US Stock market and high yielding currencies like the AUD are near resistance levels. This may mean a return to risk aversion and a selloff in the stock market and AUD/USD.
Attached Image
2
- Post #2,147
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- Feb 23, 2017 7:05am Feb 23, 2017 7:05am
- | Joined Oct 2016 | Status: Member | 518 Posts
DislikedLadies and Gentleman , IT IS IMPOSSIBLE to be a winning Forex Trader if your mindset is FIXED. The EUR/USD thread on Forex Factory is probably the most read Forex thread in the World and it represents the thoughts and emotions of Forex Traders around the World. AS LONG AS THE MINDSET STATES THAT EUR/USD must recover and GO UP , you have guaranteed your losses. The Trend for now is CLEARLY DOWN and if you trade against the Trend then you cannot win. Sure you might trade counter trend and make some PIPS yet once it reverses it keeps going down and...Ignored
Thank you Benjamin for all of the time and effort you have put into this thread so far.
I have learned a lot since I started to follow your thread and even more when I started to interact. I am sure there are others that has also found your thread to be very useful/helpful and that they also have learned something very valuable.
I would say the 3 most important things that I have learned the past +/- 8 weeks is nr. 1 the way you think about trading and the markets as you mentioned above is very important and I think I am slowly but surely making the transition of the way I think. This is a process, but I think I am getting there.
Then of course discipline and patience for me is the most important attributes to have to become a consistent profitable trader. This is also something you should work on each and everyday.
So you say graduation is in Montreal... LOL
- Post #2,148
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- Feb 23, 2017 7:43am Feb 23, 2017 7:43am
- | Joined Oct 2016 | Status: Member | 518 Posts
http://www.zerohedge.com/news/2017-0...key-highlights
Steven Mnuchin Speaks To CNBC, Fails To Give Trump Tax Plan Details: Key Highlights
Following his first interview since being confirmed yesterday with the WSJ, US Treasury Secretary Steven Mnuchin spoke to CNBC's Becky Quick and repeated some of the key points he made yesterday, among which his hope to get tax reform done by the August Congress recess, however he again confirmed that there are too many moving pieces at this point saying it is "too early to give details" of the Trump tax plan.
As a reminder, on February 9th stocks surged after President Trump promised a "phenomenal" tax plan to be unveiled in "two or three weeks." It appears that this will not happen, and instead in his State of the Union address, where the market expects more clarity on Trump's economic policies to be unveiled, Trump will be forced to speak in broad generalities as he juggles not only passage of his tax plan in Congress, but also the process of "repeal and replace" (and rename and repair) of Obamacare which similarly has gotten bogged down in negotiations in Congress. Overnight we laid out an extensive primer of how Trump's tax policies will likely be impacted by the stalled negotiations over Obamacare.
As a reminder, yesterday in his WSJ interview, Mnuchin said the administration was working with House and Senate Republicans to smooth over differences among them on tax policy, with the aim of passing major legislation before Congress leaves for its August recess. He added, “that’s an ambitious timeline. It could slip to later in the year.” He also said the administration is “looking seriously” at the House plan that includes border adjustment and was well aware of concerns raised by specific industries. The Treasury Department had its own concerns, he added, “about what the impact may be on the dollar” from a border-adjusted tax.
On another hot button topic, despite Trump previous vows to name China a currency manipulator, Mnuchin said "we're not making any judgments" at this time.
Overall, Mnuchin avoided most "hot button" topics, and reiterated the same vague WSJ talking points to CNBC. In addition to the punchline, namely that it is "too early to give details of tax plans" here are some other notable mentions by Mnuchin in the interview:
Steven Mnuchin Speaks To CNBC, Fails To Give Trump Tax Plan Details: Key Highlights
Following his first interview since being confirmed yesterday with the WSJ, US Treasury Secretary Steven Mnuchin spoke to CNBC's Becky Quick and repeated some of the key points he made yesterday, among which his hope to get tax reform done by the August Congress recess, however he again confirmed that there are too many moving pieces at this point saying it is "too early to give details" of the Trump tax plan.
As a reminder, on February 9th stocks surged after President Trump promised a "phenomenal" tax plan to be unveiled in "two or three weeks." It appears that this will not happen, and instead in his State of the Union address, where the market expects more clarity on Trump's economic policies to be unveiled, Trump will be forced to speak in broad generalities as he juggles not only passage of his tax plan in Congress, but also the process of "repeal and replace" (and rename and repair) of Obamacare which similarly has gotten bogged down in negotiations in Congress. Overnight we laid out an extensive primer of how Trump's tax policies will likely be impacted by the stalled negotiations over Obamacare.
As a reminder, yesterday in his WSJ interview, Mnuchin said the administration was working with House and Senate Republicans to smooth over differences among them on tax policy, with the aim of passing major legislation before Congress leaves for its August recess. He added, “that’s an ambitious timeline. It could slip to later in the year.” He also said the administration is “looking seriously” at the House plan that includes border adjustment and was well aware of concerns raised by specific industries. The Treasury Department had its own concerns, he added, “about what the impact may be on the dollar” from a border-adjusted tax.
On another hot button topic, despite Trump previous vows to name China a currency manipulator, Mnuchin said "we're not making any judgments" at this time.
Overall, Mnuchin avoided most "hot button" topics, and reiterated the same vague WSJ talking points to CNBC. In addition to the punchline, namely that it is "too early to give details of tax plans" here are some other notable mentions by Mnuchin in the interview:
- "Most important thing for growth is the tax plan; tax reform is mostly focused on the middle class"
- "Tax reform will be significant"
- "High income tax cuts should be offset; the dollar and stocks are reflecting confidence in the US economy"
- "Isn't focused on day to day market moves"
- "Looking closely at border adjustment tax" although he added that there are some issues with it.
- "3% growth is very achievable, could be late 2018 before we see 3% growth"
- "Not making judgments on China currency policy; Treasury has a process for reviewing foreign-exchange policies"
- "Trump admin's growth forecast is likely to be higher that Congress"
- "Regulatory relief is also important to boost growth"
- "We're looking at significant economic changes, we're reaching out to businesses"
Finally, while he denied to provide details on plans for a 50 year bonds, he conceded that the "idea of issuing 50-year or 100-year U.S. Treasuries worth a serious look."
- Post #2,149
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- Feb 23, 2017 8:47am Feb 23, 2017 8:47am
- | Commercial Member | Joined Dec 2014 | 11,709 Posts | Online Now
Disliked{quote} Thank you Benjamin for all of the time and effort you have put into this thread so far. I have learned a lot since I started to follow your thread and even more when I started to interact. I am sure there are others that has also found your thread to be very useful/helpful and that they also have learned something very valuable. I would say the 3 most important things that I have learned the past +/- 8 weeks is nr. 1 the way you think about trading and the markets as you mentioned above is very important and I think I am slowly but surely...Ignored
Each morning when I wake up I have no set plan how my thoughts will develop. I read emails and listen to news and interviews and then come to this thread to start my day posting here. This morning I start of by addressing the post of my friend and Forex trader , KeepCalmfx.
I appreciate your comments on all the time and effort and work that I have invested in this thread since December 3, 2016. I had a reason and agenda for doing this. The reason was to assure myself that I could teach other Forex traders to do what I do and that is to be a winner trading Forex.
I learned very interesting things that I was not certain of before I started this thread. I will start by stating that interaction is essential to improving your Forex trading and I again encourage anyone reading this thread to register with Forex Factory so that you can post and we can communicate.
Here is what KeepCalmfx said was the 3 most important things learned.
"1 the way you think about trading and the markets as you mentioned above is very important and I think I am slowly but surely making the transition of the way I think. This is a process, but I think I am getting there. Then of course discipline and patience for me is the most important attributes to have to become a consistent profitable trader. This is also something you should work on each and everyday. So you say graduation is in Montreal... LOL [/quote]"
I would venture a guess that there is about Ten Million Retail Forex Traders in the world and at least 75% of them are mainly technical traders.
As I have said that being the case they have NO CHANCE to become professional Forex traders.
Look at the excellent chart that I just posted from the EUR/USD Thread. I have now covered the most important thing that KeepCalmfx has learned. Then we go to PATIENCE and DISCIPLINE.
I put DISCIPLINE third YET it is the most IMPORTANT because without that this thread would have NEVER reached 108 pages. The ONLY reason that I kept posting even though I had proven to myself conclusively that I could teach what I have learned in the last 14 years on my own was because of other things that I was learning about the retail Forex trading community as represented by the EUR/USD thread.
I have other things to do today so I will leave it to KeepCalmfx to keep us informed. I see GOLD is up bigtime this morning. I also manage a stock portfolio and I expect to see nice profits today from the Equities I bought yesterday before the FOMC release of the minutes.
http://www.forexfactory.com/attachme...2&d=1487840954
Look at this chart on EUR/USD or any other chart and it cannot tell you anything with any certainty.
MONEY FLOW IS CERTAIN. RISK MANAGEMENT IS CERTAIN. FACTS ARE CERTAIN EVEN IF FAKE NEWS since it changes PERCEPTION which MOVES the MARKETS until REALITY sets in. Such as no NEW Tax Plan until August 2017 if EVER !!!
Have a great day.
Benjaminis
1
- Post #2,150
- Quote
- Feb 23, 2017 4:56pm Feb 23, 2017 4:56pm
- | Commercial Member | Joined Dec 2014 | 11,709 Posts | Online Now
http://www.zerohedge.com/news/2017-0...ops+to+zero%29
by Tyler Durden
Feb 23, 2017 4:03 PM
Mnuchin hit the reset button and then asset gatherers spent the day like this...
The Dow topped 20,800 shrugging off any fears from Mnuchin...thanks to a VIX slam...
http://www.zerohedge.com/sites/defau...23_EOD16_0.jpg
http://design.sharethrough.com/asset...ay-squared.png
Understanding RSPs and TFSAs
Total panic bid right at he close to ensure 20,800 and to get the S&P green...
http://www.zerohedge.com/sites/defau...23_EOD17_0.jpg
Making the 10th record close in a row - something that has only happened once before in the 100-year-plus history of The Dow...1987
COMMENTS FROM BENJAMINIS: That was intentionally done as we only have manipulated markets at the moment.
http://www.zerohedge.com/sites/defau...223_EOD1_0.jpg
The Value Line Geometric Composite Index has officially broken out...
http://www.zerohedge.com/sites/defau...223_EOD2_0.jpg
Dana Lyons explains The Value Line Geometric Composite (VLG), as we have explained many times in these pages, is an unweighted average that tracks the median stock performance among a universe of approximately 1800 stocks. Thus, in our view, it serves as perhaps the best representation of the true state of the U.S. equity market. Additionally, it has historically been very true to technical analysis and charting techniques, which is quite remarkable considering there are no tradeable vehicles based on it. And, as noted, the VLG is testing a monumental level at the moment, going back several decades.
The S&P Tech sector finally had a losing day in Feb...
http://www.zerohedge.com/sites/defau...23_EOD14_0.jpg
Ending the record winning streak...
http://www.zerohedge.com/sites/defau...223_EOD3_0.jpg
Construction stocks tumble most since June on Trump infrastructure plan timing doubts
http://www.zerohedge.com/sites/defau...NFRAFAIL_0.jpg
Tesla tumbled...
http://www.zerohedge.com/sites/defau...223_EOD7_0.jpg
WalMart took a spill late on after Trump raise the border tax again...
http://www.zerohedge.com/sites/defau...223_EOD9_0.jpg
As did the rest of the Retail sector...
http://www.zerohedge.com/sites/defau...23_EOD12_0.jpg
VIX and VXV have entirely decoupled from stocks...
http://www.zerohedge.com/sites/defau...223_EOD8_0.jpg
Mnuchin's comments sparked reflexive buying in bonds and stocks but that soon broke with stocks tumbling to recouple with bond yields drop...
http://www.zerohedge.com/sites/defau...23_EOD10_0.jpg
Rates dropped notably on Mnuchin's comments (with the long-end underperforming) - now all lower in yield on the week...
http://www.zerohedge.com/sites/defau..._EOD11_1_0.jpg
ED/FF Futures indicate that March rate hike odds are tumbling as hawks shift out to May...
http://www.zerohedge.com/sites/defau..._volume3_0.jpg
The USD Index tumbled on Mnuchin comments - the biggest drop since January. NOTE - no bounce in the USD after Trump brought up the BAT again (and tanked retail stocks)
http://www.zerohedge.com/sites/defau...223_EOD4_0.jpg
With Cable and yen strength the biggest driver...
http://www.zerohedge.com/sites/defau...23_EOD13_0.jpg
Gold topped $1250 (best day for Gold since December) - erasing most of the Trump losses - and Silver broke above its 200DMA...
http://www.zerohedge.com/sites/defau...223_EOD5_0.jpg
Bitcoin reached a new record high in USD terms...
http://www.zerohedge.com/sites/defau...23_EOD15_0.jpg
Copper dumped on end of strike chatter and US infrastructure doubts
http://www.zerohedge.com/sites/defau...223_EOD6_0.jpg
by Tyler Durden
Feb 23, 2017 4:03 PM
Mnuchin hit the reset button and then asset gatherers spent the day like this...
The Dow topped 20,800 shrugging off any fears from Mnuchin...thanks to a VIX slam...
http://www.zerohedge.com/sites/defau...23_EOD16_0.jpg
http://design.sharethrough.com/asset...ay-squared.png
Understanding RSPs and TFSAs
Total panic bid right at he close to ensure 20,800 and to get the S&P green...
http://www.zerohedge.com/sites/defau...23_EOD17_0.jpg
Making the 10th record close in a row - something that has only happened once before in the 100-year-plus history of The Dow...1987
COMMENTS FROM BENJAMINIS: That was intentionally done as we only have manipulated markets at the moment.
http://www.zerohedge.com/sites/defau...223_EOD1_0.jpg
The Value Line Geometric Composite Index has officially broken out...
http://www.zerohedge.com/sites/defau...223_EOD2_0.jpg
Dana Lyons explains The Value Line Geometric Composite (VLG), as we have explained many times in these pages, is an unweighted average that tracks the median stock performance among a universe of approximately 1800 stocks. Thus, in our view, it serves as perhaps the best representation of the true state of the U.S. equity market. Additionally, it has historically been very true to technical analysis and charting techniques, which is quite remarkable considering there are no tradeable vehicles based on it. And, as noted, the VLG is testing a monumental level at the moment, going back several decades.
The S&P Tech sector finally had a losing day in Feb...
http://www.zerohedge.com/sites/defau...23_EOD14_0.jpg
Ending the record winning streak...
http://www.zerohedge.com/sites/defau...223_EOD3_0.jpg
Construction stocks tumble most since June on Trump infrastructure plan timing doubts
http://www.zerohedge.com/sites/defau...NFRAFAIL_0.jpg
Tesla tumbled...
http://www.zerohedge.com/sites/defau...223_EOD7_0.jpg
WalMart took a spill late on after Trump raise the border tax again...
http://www.zerohedge.com/sites/defau...223_EOD9_0.jpg
As did the rest of the Retail sector...
http://www.zerohedge.com/sites/defau...23_EOD12_0.jpg
VIX and VXV have entirely decoupled from stocks...
http://www.zerohedge.com/sites/defau...223_EOD8_0.jpg
Mnuchin's comments sparked reflexive buying in bonds and stocks but that soon broke with stocks tumbling to recouple with bond yields drop...
http://www.zerohedge.com/sites/defau...23_EOD10_0.jpg
Rates dropped notably on Mnuchin's comments (with the long-end underperforming) - now all lower in yield on the week...
http://www.zerohedge.com/sites/defau..._EOD11_1_0.jpg
ED/FF Futures indicate that March rate hike odds are tumbling as hawks shift out to May...
http://www.zerohedge.com/sites/defau..._volume3_0.jpg
The USD Index tumbled on Mnuchin comments - the biggest drop since January. NOTE - no bounce in the USD after Trump brought up the BAT again (and tanked retail stocks)
http://www.zerohedge.com/sites/defau...223_EOD4_0.jpg
With Cable and yen strength the biggest driver...
http://www.zerohedge.com/sites/defau...23_EOD13_0.jpg
Gold topped $1250 (best day for Gold since December) - erasing most of the Trump losses - and Silver broke above its 200DMA...
http://www.zerohedge.com/sites/defau...223_EOD5_0.jpg
Bitcoin reached a new record high in USD terms...
http://www.zerohedge.com/sites/defau...23_EOD15_0.jpg
Copper dumped on end of strike chatter and US infrastructure doubts
http://www.zerohedge.com/sites/defau...223_EOD6_0.jpg
COMMENTS FROM BENJAMINIS: This brings us up to date what the markets did today and now we move on to Asia. Stay Tuned.
1
- Post #2,151
- Quote
- Feb 23, 2017 5:22pm Feb 23, 2017 5:22pm
- | Commercial Member | Joined Dec 2014 | 11,709 Posts | Online Now
HERE IS ONE CREDIBLE VIEW ON WHAT IS REALLY GOING ON.
http://www.shtfplan.com/headline-new...lapse_02232017
As a part of the increasingly obvious set-up of conservative movements by international banking interests and globalist think-tanks, I have noticed an expanding disinformation campaign which appears to be designed to wash the Federal Reserve of culpability for the crash of 2008 that has continued to fester to this day despite the many claims of economic recovery. I believe this program is meant to set the stage for a coming conflict between the Trump Administration and the Fed, but what would be the ultimate consequences of such an event?
In my article The False Economic Recovery Narrative Will Die In 2017, I outlined the propaganda trap being established by globalist owned and operated media outlets like Bloomberg, in which they consistently claim that Donald Trump has inherited an economy in recovery and ascendancy from the Obama administration. I thoroughly debunked their positions and evidence by showing how each of their fundamental indicators has actually been in steady decline since 2008, even in the face of massive monetary intervention and fiat printing by the Fed.
My greatest concern leading up to the 2016 election was that Trump would be allowed to win because he represents the perfect scapegoat for an economic crisis that central banks have been brewing for years. Whether or not Trump is aware of this plan cannot yet be proven, but as I have mentioned in the past, his cabinet of Goldman Sachs alumni and neo-con veterans hardly gives me confidence. In the best case scenario, Trump is surrounded by enemies; in the worst case scenario, he is surrounded by friends.
Trumps loyalties, though, are a secondary issue for now. The primary focus of this article is to discern whether or not a battle between Trump and the Fed will result in a net positive or a net negative for the public. My position is that any action against the Fed should have happened years ago, and that today, the Fed is nothing more than a sacrificial appendage of a greater globalist agenda. Meaning, conservative groups should be aware that a victory over the Fed is not actually a victory over the globalists. In fact, the globalists may very well WANT a war between the Fed and the White House at this time.
First, some facts need to be established to counter the propaganda claims that the Fed is some kind of innocent victim of a rampaging President Trump or misguided conservative rhetoric.
The Scapegoat Setup Continues
The latest extension of the Feds propaganda has been initiated, of course, by the mainstream media and liberals in general; you know, the same people that were applauding the (in some cases misguided) efforts of the Occupy Wall Street movement. With Trumps negation of the Dodd-Frank Act, the media has been looking for any opportunity to assert that Trump is either acting to enrich his corporate friends or that he is an idiot man-child when it comes to matters of business and economics.
This led to some sniping by Elizabeth Warren and Federal Reserve Board Chair Janet Yellens testimony before congress last week. The argument? That Trump was wrong or lying when he said that Dodd-Frank had frozen loans from major banks. You can see the glee in media outlets over the stab; a recent article by Vanity Fair, which seemed to focus more on snide ankle biting of Trump than concrete evidence, is a perfect example.
Now, in Trumps defense (or at least, in defense of his position), Yellen is actually the one lying, here. While it is true that commercial lending has expanded, her claim that small business loans have improved is simply false. Even Bloomberg begrudgingly acknowledges that small business loans have fallen by at least 6% since the passage of Dodd-Frank. In Obamas favorite liberal home-base, Chicago, loans to small neighborhood businesses declined by 49% between 2008 and 2014.
In 2015, Yellen herself argued that small business loans were in decline because small business owners dont want loans anymore. This is a bit like the Bureau of Labor Statistics arguing that over 95 million unemployed working age Americans should not be counted as unemployed in their stats because they really dont want a job. It is an attempt to muddy the waters on the greater issue, which is that the U.S. economy is in considerable danger.
You see, I dont think Trump was debating that major corporations and banks were not receiving ample loans, I think he was primarily pointing out the disparity in small business loans and personal loans. Yellen and the mainstream media attempted to use one data point commercial loans, to dismiss the entire debate over loan stagnation.
The Fed Is Culpable For Our Bubble Economy And Trying To Shift Blame Before A Collapse
The fact is, we all KNOW that major corporations and banks have been flooded with ample loans, and much of this capital was conjured out of thin air by the Fed itself through fiat creation and near zero interest rates. We know this because of the $16 trillion in loans made to companies around the world exposed by the revealing (but limited) TARP audit. We also know this because much of these loans have been used to inflate the stock market bubble for the past few years through endless stock buybacks that most companies never would have been able to afford otherwise. We also know that the mainstream investment world is aware of the importance of these loans because they started to panic as the Fed announced its ongoing program of interest rate hikes.
Beyond that, we know that the Feds low interest loans and culture of circular inbred lending between corporations and banks have been instrumental in keeping stocks hyperinflated, because Fed officials have OPENLY ADMITTED that this is the case. As Richard Fisher of the Dallas Fed stated in an interview with CNBC:
What the Fed did and I was part of that group is we front-loaded a tremendous market rally, starting in 2009. Its sort of what I call the reverse Whimpy factor give me two hamburgers today for one tomorrow. Im not surprised that almost every index you can look at was down significantly. [Referring to the results in the stock market after the Fed raised rates in December 2015.]
I was warning my colleagues, Dont go wobbly if we have a 10-20 percent correction at some point. Everybody you talk to has been warning that these markets are heavily priced.
So, again, the issue is not whether or not banks are lending, we know they are lending, they just arent lending to the people that need it most.
I think Fisher was dishonest in his evaluation of the extent of the consequences of the Fed bubble and that a 10% to 20% drop in equities is an absurd underestimation. But setting aside the little white lies, it is at least widely available knowledge that the Federal Reserve initiated a corporate loan free-for-all, knowing that the supposed benefits were limited in scope as well as in duration. They know that a crash is coming, and they have been stalling until they can find the right scapegoat to divert blame. That scapegoat is Trump, and by association, all conservatives.
As far as Dodd-Frank is concerned, the act was supposed to be a primer for stopping destructive behavior in the financial sector, more specifically in derivatives. Yet, in spite of Dodd-Frank, banks like Citigroup are STILL bloated with derivatives after receiving at least $476 billion in taxpayer funds to stop them from going bankrupt for the very same irresponsibility.
Dodd-Frank accomplished absolutely nothing in terms of what it was mandated to do. I believe the only true purpose of Dodd-Frank was to distract everyone from Ron Pauls Fed audit bill, which was gaining major traction at the time.
Liberals And The Fed Become Bedfellows?
So, why does Trumps undercutting of Dodd-Frank even matter? As outlined above, it is a propaganda point for the establishment to perpetuate the narrative that Trump is incompetent, that the people who support him are incompetent, and that when the economy does shift into greater crisis it will be his fault and the fault of conservatives. It is also a springboard for the Federal Reserve to attack Trump, as shown in Yellens congressional testimony.
I also find it interesting that through the Dodd-Frank issue as well as others, leftists are being galvanized in support around the Federal Reserve, something that they probably would not have done a couple of years ago. This is all culminating in what I believe will become a titanic battle not only between Trump and Leftists, but also between Donald Trump and the Fed. But why would the establishment want to incite a conflict between the president and the central bank?
This is something conservatives and liberty activists have wanted for decades a president that would be willing to take on the Federal Reserve and expose its innards. The problem is, the time for the effectiveness of such an action is long gone. Auditing the Fed under Obama (an openly pro-globalist president) would have been a disaster for the powers that be. It would have thrown their entire agenda into disarray and killed any chance that they could complete what they call the great global economic reset. Auditing or shutting down the Fed under Trump is another matter.
As I examined in detail with evidence in my article The Economic End Game Explained, the Federal Reserve has a shelf life. It has already served its purpose, which was to undermine the American economy and our currency system. The Fed will now begin deflating the bubbles it has engineered in stocks, Treasuries and the dollar through continued interest rate hikes and rolling out the over $4 trillion (official amount) on its balance sheet. The goal? Sinking America and reducing it to third world status over the course of the next several years to make way for total global centralization of economic administration, eventually leading to global fiscal management under the IMF and perhaps the BIS, and a global currency system; all while making conservative movements look like the monster behind the crisis.
COMMENTS FROM BENJAMINIS: The incredible information shared here is real of that there is NO DOUBT. So the question might be why do I need to know this to trade Forex ? There are two answers and the first is you should know this in order to protect yourself and your family and be aware of what will happen to our world. The second answer you only need to be aware of what is going on since if you really do and the way that it is explained is not that difficult to learn. I am teaching myself and preparing myself so while I share then I learn. I have already opened up my new Forex $50,000 US Funds Demo Account with FXCM UK and I put on one trade this morning at 10:31 AM as I went SHORT SPX500 , 100 units. My STOP LOSS IS SET AT $1005 US Dollars and my LIMIT OUT IS SET AT $1250 US Dollars.
The cost of Margin is $1250 so my RISK REWARD RATIO is $1250 VS $1005.
At the moment I have a DRAW DOWN of $400 US Dollars and Equity of $49,600 US Dollars as the Roll Overs are being calculated. Over the weekend I will finally follow KeepCalmfx instructions to do my SCREENSHOT.
To summarize, the U.S. economy and the dollar are slated for a controlled demolition. The Fed will do everything in its power to prod Trump and conservatives into war with the central bank, because the Fed is now ready to sacrifice itself and the dollars world reserve status in order to clear a path for a new global system and ideology. The Federal Reserve is a suicide bomber.
If this takes place as I predict then the international banks and the establishment elites will be able to lay the blame for the death of king dollar squarely at the feet of Trump and conservatives, and at least a third of the country (leftists) will buy into the narrative lock, stock and barrel because they desperately WANT to believe it.
Remember, the tale being scripted here is that Trump is a rampaging maniac that does not know what he is doing.
To be clear, I am not supporting the continuing dominance of the Fed, or the existence of the fiat dollar. What I am saying is that conservatives may just get what we have been wishing for all these years but not in the manner we had hoped.
To counter this threat our list of targets must expand to meet reality. The delusion that the core problem is the Federal Reserve must stop. The Fed is a box store, a franchise in a chain of franchises, nothing more. If we do not also turn our scrutiny and aggression towards root globalist institutions like the IMF and the BIS as well as international banks, then our efforts will only serve to bolster the enemy we are trying to fight.
In a battle limited to Trump versus the Fed, only the bankers will win.
Click here to subscribe: Join over one million monthly readers and receive breaking news, strategies, ideas and commentary.
COMMENTS FROM BENJAMINIS: After I closed the post I read the commentary of the following person and since it was so clear and well written then I share it here for everyone to read.
Zeus says:
Comment ID: 3668351
February 23, 2017 at 10:30 am
RE: Trump and the Fed. Right now the Fed Reserve (((Private Family Corp))) has enjoyed a 100 Year Monopoly on the US currency. Until we break up that Monopoly we will be a slave to their Debt system. JF Kennedy tried to unlock that Monopoly with EO-11110 by issuing a competing US Dollars backed with Silver.
That is what we need to go back to, Money backed by real tangible assets. Running with a Fiat currency backed by nothing but thin air of the US Tax payers is not a solid plan. If you also let them run the printing presses, creating unlimited IOU’s, it is set up for massive abuse. And that’s what we have today.
Get your Gold and Silver in place to preserve your wealth or suffer when this house of Ponzi Fraud collapses. And that is coming very shortly. You have been warned here for several years now, Get your PM’s in place.
http://www.shtfplan.com/headline-new...lapse_02232017
http://i1.wp.com/shtfplan.com/wp-con...dees.jpg?w=480
This article was written by Brandon Smith and originally published at Alt-Market.com.
Editors Comment: What goes up must come down. This action has been planned for sometime. It is clear that the Federal Reserve pushed the QE liquidity bubble to its absolute extremes during the Obama years, knowing all along that it would simply raise rates once the ride was over. Now that this is beginning to happen, at the timing of the Feds choosing, it is being dumped on the Trump Administration. And President Trump has been shaping the narrative for his fight against the banks policies since the during his campaign.
Who really is pulling the strings in such a battle? Will there be any meaningful reforms (The Dodd Frank Act was a half-measure at best)? Will the popped bubble crash the economy and leave Americans stranded? Only time will tell.
In A Battle Between Trump And The Federal Reserve, Who Really Wins?
by Brandon Smith
As a part of the increasingly obvious set-up of conservative movements by international banking interests and globalist think-tanks, I have noticed an expanding disinformation campaign which appears to be designed to wash the Federal Reserve of culpability for the crash of 2008 that has continued to fester to this day despite the many claims of economic recovery. I believe this program is meant to set the stage for a coming conflict between the Trump Administration and the Fed, but what would be the ultimate consequences of such an event?
In my article The False Economic Recovery Narrative Will Die In 2017, I outlined the propaganda trap being established by globalist owned and operated media outlets like Bloomberg, in which they consistently claim that Donald Trump has inherited an economy in recovery and ascendancy from the Obama administration. I thoroughly debunked their positions and evidence by showing how each of their fundamental indicators has actually been in steady decline since 2008, even in the face of massive monetary intervention and fiat printing by the Fed.
My greatest concern leading up to the 2016 election was that Trump would be allowed to win because he represents the perfect scapegoat for an economic crisis that central banks have been brewing for years. Whether or not Trump is aware of this plan cannot yet be proven, but as I have mentioned in the past, his cabinet of Goldman Sachs alumni and neo-con veterans hardly gives me confidence. In the best case scenario, Trump is surrounded by enemies; in the worst case scenario, he is surrounded by friends.
Trumps loyalties, though, are a secondary issue for now. The primary focus of this article is to discern whether or not a battle between Trump and the Fed will result in a net positive or a net negative for the public. My position is that any action against the Fed should have happened years ago, and that today, the Fed is nothing more than a sacrificial appendage of a greater globalist agenda. Meaning, conservative groups should be aware that a victory over the Fed is not actually a victory over the globalists. In fact, the globalists may very well WANT a war between the Fed and the White House at this time.
First, some facts need to be established to counter the propaganda claims that the Fed is some kind of innocent victim of a rampaging President Trump or misguided conservative rhetoric.
The Scapegoat Setup Continues
The latest extension of the Feds propaganda has been initiated, of course, by the mainstream media and liberals in general; you know, the same people that were applauding the (in some cases misguided) efforts of the Occupy Wall Street movement. With Trumps negation of the Dodd-Frank Act, the media has been looking for any opportunity to assert that Trump is either acting to enrich his corporate friends or that he is an idiot man-child when it comes to matters of business and economics.
This led to some sniping by Elizabeth Warren and Federal Reserve Board Chair Janet Yellens testimony before congress last week. The argument? That Trump was wrong or lying when he said that Dodd-Frank had frozen loans from major banks. You can see the glee in media outlets over the stab; a recent article by Vanity Fair, which seemed to focus more on snide ankle biting of Trump than concrete evidence, is a perfect example.
Now, in Trumps defense (or at least, in defense of his position), Yellen is actually the one lying, here. While it is true that commercial lending has expanded, her claim that small business loans have improved is simply false. Even Bloomberg begrudgingly acknowledges that small business loans have fallen by at least 6% since the passage of Dodd-Frank. In Obamas favorite liberal home-base, Chicago, loans to small neighborhood businesses declined by 49% between 2008 and 2014.
In 2015, Yellen herself argued that small business loans were in decline because small business owners dont want loans anymore. This is a bit like the Bureau of Labor Statistics arguing that over 95 million unemployed working age Americans should not be counted as unemployed in their stats because they really dont want a job. It is an attempt to muddy the waters on the greater issue, which is that the U.S. economy is in considerable danger.
You see, I dont think Trump was debating that major corporations and banks were not receiving ample loans, I think he was primarily pointing out the disparity in small business loans and personal loans. Yellen and the mainstream media attempted to use one data point commercial loans, to dismiss the entire debate over loan stagnation.
The Fed Is Culpable For Our Bubble Economy And Trying To Shift Blame Before A Collapse
The fact is, we all KNOW that major corporations and banks have been flooded with ample loans, and much of this capital was conjured out of thin air by the Fed itself through fiat creation and near zero interest rates. We know this because of the $16 trillion in loans made to companies around the world exposed by the revealing (but limited) TARP audit. We also know this because much of these loans have been used to inflate the stock market bubble for the past few years through endless stock buybacks that most companies never would have been able to afford otherwise. We also know that the mainstream investment world is aware of the importance of these loans because they started to panic as the Fed announced its ongoing program of interest rate hikes.
Beyond that, we know that the Feds low interest loans and culture of circular inbred lending between corporations and banks have been instrumental in keeping stocks hyperinflated, because Fed officials have OPENLY ADMITTED that this is the case. As Richard Fisher of the Dallas Fed stated in an interview with CNBC:
What the Fed did and I was part of that group is we front-loaded a tremendous market rally, starting in 2009. Its sort of what I call the reverse Whimpy factor give me two hamburgers today for one tomorrow. Im not surprised that almost every index you can look at was down significantly. [Referring to the results in the stock market after the Fed raised rates in December 2015.]
I was warning my colleagues, Dont go wobbly if we have a 10-20 percent correction at some point. Everybody you talk to has been warning that these markets are heavily priced.
So, again, the issue is not whether or not banks are lending, we know they are lending, they just arent lending to the people that need it most.
I think Fisher was dishonest in his evaluation of the extent of the consequences of the Fed bubble and that a 10% to 20% drop in equities is an absurd underestimation. But setting aside the little white lies, it is at least widely available knowledge that the Federal Reserve initiated a corporate loan free-for-all, knowing that the supposed benefits were limited in scope as well as in duration. They know that a crash is coming, and they have been stalling until they can find the right scapegoat to divert blame. That scapegoat is Trump, and by association, all conservatives.
As far as Dodd-Frank is concerned, the act was supposed to be a primer for stopping destructive behavior in the financial sector, more specifically in derivatives. Yet, in spite of Dodd-Frank, banks like Citigroup are STILL bloated with derivatives after receiving at least $476 billion in taxpayer funds to stop them from going bankrupt for the very same irresponsibility.
Dodd-Frank accomplished absolutely nothing in terms of what it was mandated to do. I believe the only true purpose of Dodd-Frank was to distract everyone from Ron Pauls Fed audit bill, which was gaining major traction at the time.
Liberals And The Fed Become Bedfellows?
So, why does Trumps undercutting of Dodd-Frank even matter? As outlined above, it is a propaganda point for the establishment to perpetuate the narrative that Trump is incompetent, that the people who support him are incompetent, and that when the economy does shift into greater crisis it will be his fault and the fault of conservatives. It is also a springboard for the Federal Reserve to attack Trump, as shown in Yellens congressional testimony.
I also find it interesting that through the Dodd-Frank issue as well as others, leftists are being galvanized in support around the Federal Reserve, something that they probably would not have done a couple of years ago. This is all culminating in what I believe will become a titanic battle not only between Trump and Leftists, but also between Donald Trump and the Fed. But why would the establishment want to incite a conflict between the president and the central bank?
This is something conservatives and liberty activists have wanted for decades a president that would be willing to take on the Federal Reserve and expose its innards. The problem is, the time for the effectiveness of such an action is long gone. Auditing the Fed under Obama (an openly pro-globalist president) would have been a disaster for the powers that be. It would have thrown their entire agenda into disarray and killed any chance that they could complete what they call the great global economic reset. Auditing or shutting down the Fed under Trump is another matter.
As I examined in detail with evidence in my article The Economic End Game Explained, the Federal Reserve has a shelf life. It has already served its purpose, which was to undermine the American economy and our currency system. The Fed will now begin deflating the bubbles it has engineered in stocks, Treasuries and the dollar through continued interest rate hikes and rolling out the over $4 trillion (official amount) on its balance sheet. The goal? Sinking America and reducing it to third world status over the course of the next several years to make way for total global centralization of economic administration, eventually leading to global fiscal management under the IMF and perhaps the BIS, and a global currency system; all while making conservative movements look like the monster behind the crisis.
COMMENTS FROM BENJAMINIS: The incredible information shared here is real of that there is NO DOUBT. So the question might be why do I need to know this to trade Forex ? There are two answers and the first is you should know this in order to protect yourself and your family and be aware of what will happen to our world. The second answer you only need to be aware of what is going on since if you really do and the way that it is explained is not that difficult to learn. I am teaching myself and preparing myself so while I share then I learn. I have already opened up my new Forex $50,000 US Funds Demo Account with FXCM UK and I put on one trade this morning at 10:31 AM as I went SHORT SPX500 , 100 units. My STOP LOSS IS SET AT $1005 US Dollars and my LIMIT OUT IS SET AT $1250 US Dollars.
The cost of Margin is $1250 so my RISK REWARD RATIO is $1250 VS $1005.
At the moment I have a DRAW DOWN of $400 US Dollars and Equity of $49,600 US Dollars as the Roll Overs are being calculated. Over the weekend I will finally follow KeepCalmfx instructions to do my SCREENSHOT.
To summarize, the U.S. economy and the dollar are slated for a controlled demolition. The Fed will do everything in its power to prod Trump and conservatives into war with the central bank, because the Fed is now ready to sacrifice itself and the dollars world reserve status in order to clear a path for a new global system and ideology. The Federal Reserve is a suicide bomber.
If this takes place as I predict then the international banks and the establishment elites will be able to lay the blame for the death of king dollar squarely at the feet of Trump and conservatives, and at least a third of the country (leftists) will buy into the narrative lock, stock and barrel because they desperately WANT to believe it.
Remember, the tale being scripted here is that Trump is a rampaging maniac that does not know what he is doing.
To be clear, I am not supporting the continuing dominance of the Fed, or the existence of the fiat dollar. What I am saying is that conservatives may just get what we have been wishing for all these years but not in the manner we had hoped.
To counter this threat our list of targets must expand to meet reality. The delusion that the core problem is the Federal Reserve must stop. The Fed is a box store, a franchise in a chain of franchises, nothing more. If we do not also turn our scrutiny and aggression towards root globalist institutions like the IMF and the BIS as well as international banks, then our efforts will only serve to bolster the enemy we are trying to fight.
In a battle limited to Trump versus the Fed, only the bankers will win.
This article was written by Brandon Smith and originally published at Alt-Market.com.
Click here to subscribe: Join over one million monthly readers and receive breaking news, strategies, ideas and commentary.
COMMENTS FROM BENJAMINIS: After I closed the post I read the commentary of the following person and since it was so clear and well written then I share it here for everyone to read.
Zeus says:
Comment ID: 3668351
February 23, 2017 at 10:30 am
RE: Trump and the Fed. Right now the Fed Reserve (((Private Family Corp))) has enjoyed a 100 Year Monopoly on the US currency. Until we break up that Monopoly we will be a slave to their Debt system. JF Kennedy tried to unlock that Monopoly with EO-11110 by issuing a competing US Dollars backed with Silver.
That is what we need to go back to, Money backed by real tangible assets. Running with a Fiat currency backed by nothing but thin air of the US Tax payers is not a solid plan. If you also let them run the printing presses, creating unlimited IOU’s, it is set up for massive abuse. And that’s what we have today.
Get your Gold and Silver in place to preserve your wealth or suffer when this house of Ponzi Fraud collapses. And that is coming very shortly. You have been warned here for several years now, Get your PM’s in place.
1
- Post #2,152
- Quote
- Edited 5:40pm Feb 23, 2017 5:30pm | Edited 5:40pm
- | Commercial Member | Joined Dec 2014 | 11,709 Posts | Online Now
FROM WWW.JSMINESET.COM
Posted February 23rd, 2017 at 1:09 PM (CST) by Jim Sinclair & filed under General Editorial.
Interest rates are blowing out and the question is who goes first
January was the worst month for European government bonds in history with all the bonds blowing out. TCW, the US asset manager that runs worlds largest actively managed bond fund, has eliminated its exposure to Eurozone bank debt over fears these lenders are excessively risky. Soon the interest rates will reach crucial levels led by the US. What I mean by that is that the US Treasury 10y rates will reverse the 35-year trend and exceed the 3% level which will cause huge bond losses. The way the US interest rates go the rest of the world goes especially in the intertwined world we are living today.
10-year U.S. Treasuries are resting at 2.45% because the ECB and BOJ are buying $150 billion a month of their own bonds and much of that money then flows from 10 basis points JGBs and 45 basis point Bunds into 2.45% U.S. Treasuries. A $12 trillion global central bank balance sheet looks permanent and is growing at over $1 trillion a year, thanks to the ECB and the BOJ. Without that financial methadone, both bond and stock markets worldwide would sink and produce a tantrum of significant proportions. Gross believes that without QE from the ECB and BOJ that 10-year U.S. Treasuries would rather quickly rise to 3.5% and the U.S. economy would sink into recession. And with scarcity of supply of long-term government bonds the illiquidity is severely constraining the efficiency of the bond-buying program of the central banks in keeping interest rates down.
We see situations of upward pressure on interest rates in Europe with Italian interest rates rising from 1% in the beginning of September to 2.35% (+135%) on January 30, 2017. In Germany the pace of inflation more than doubled in December, driven by a surge in oil (low base effect). Consumer prices rose 1.7% from a year ago, recording the biggest jump on record according to the Federal Statistics Office in Wiesbaden. German interest rates rose from a negative 0.20% at the end of September to a positive 0.50% on January 30. And then we of course have the Japanese situation. Japans 10-year yield surged as traders judged the central banks recent expanded bond purchases of 450 billion yen ($4 billion) to be insufficient to cap borrowing costs as global rates continued rising and steepening around the globe. As a result the 10Y yield on the JGBs rose as much as 4 bps to 0.14% on February 2, 2017, the highest since January of 2016, the market was clearly hoping for even more. Furthermore there may be a scarcity in long-dated supply, arguably the stuff of Kurodas nightmares. We see the same situation of scarcity of supply everywhere and thus the failing of the central banks policies.
Italy worlds third largest bond market (2.2trn) could cause the dominos to fall
Italy is the third or fourth largest bond market in the world amounting to 2.2trn with bank NPLs (Non-Performing Loans) of 360bn and youth unemployment of 40%. Do you think that Italy raising 20bn and rescuing Monte Paschi with 8.8bn solves the Italian banking crisis? Think again what do you think what interest rates rising from 0.99% September 1, 2016 to 2.35% on January 30, 2017 are telling us. If it is risk or inflation doesnt really matter rates have more than doubled since September and I think we will see 4% in Italy before the end of 2017 worsening the Italian debt situation further.
Next to that without any stable Government, from 1945 to 1994 (49 years) Italy had 61 Governments, how much accountability do you think there really is and time to seriously tackle structural problems. On January 25, 2017 Italys Constitutional Court approved a new voting system based on proportional representation that raises the chance of an early election this summer whilst for the time being an interim cabinet has been appointed. On top of the Italian conundrum we have the elections in The Netherlands, March 13, France, April 23 and Germany, September 2017 that are clearly signifying a pull to the right, with people fed up with politicians and an islamitization of Europe, representing multiple potential exits from the EU which each can cause the break up of the EU with all its consequences.
The tools in the toolbox are getting exhausted and there is no plan B!
It should be clear by now that it looks like all the tools in the toolbox are getting exhausted and it feels like all these events are converging with the weakest chain (3% US Treasury rates, Chinas Yuan, Italys banks/bond market) snapping first subsequently followed by the lesser weak chains. This world is more interconnected than it has ever been (all banks hold billions of national and foreign government paper and international trade) in history and therefore the danger of a global ripple effect is more serious than ever. France for example holds in excess of 250bn of Italian bonds. And Germany stands out as the biggest creditor with net claims of 754.1bn. They can kiss goodbye to that money! Less than 4 years ago, and shortly after his infamous whatever it takes threat to speculators, Mario Draghi responded to a question, saying, there is no Plan B when it comes to contingency plans for a Eurozone nation leaving the monetary union. So much for that, he is basically saying bad luck if it doesnt work.
Draghi was also quoted saying that member states can exit the EU but first have to repay their debt. Though when like Italy you have 2.2trn in Government debt and a Debt/GDP ratio of 132%, youth unemployment of 40% and NPL 360bn+ explain to me how you are going to repay debt being Italy or any country for that sake? And when Italy reinstates the Lire how is this currency inheriting a huge debt load going to be well positioned to repay the huge Euro debt? Well in one quite simple answer it will not, it will further undermine the credibility of debt and the currencies. Conclusion ergo an exit of Italy out of the EU will cause huge debt defaults. And I dont believe investors will massively flee into the US dollar because an Italian exit will finally make investors aware that debt is debt and the situation isnt better in Japan, China or the US for that sake.
More
Gijsbert Groenewegen
THE PDF FILE OF THIS GREAT ARTICLE. PLEASE PRINT IT OUT AND READ IT AND SHARE IT !!!
http://www.321gold.com/editorials/gr...egen020917.pdf
COMMENTS FROM BENJAMINIS: I tried to copy and paste the 7 pages of the article and I am not able to, so I need to tell you that it MUST be read since the rest of the article lays out exactly how the World Financial system will collapse.
Posted February 23rd, 2017 at 1:09 PM (CST) by Jim Sinclair & filed under General Editorial.
Interest rates are blowing out and the question is who goes first
January was the worst month for European government bonds in history with all the bonds blowing out. TCW, the US asset manager that runs worlds largest actively managed bond fund, has eliminated its exposure to Eurozone bank debt over fears these lenders are excessively risky. Soon the interest rates will reach crucial levels led by the US. What I mean by that is that the US Treasury 10y rates will reverse the 35-year trend and exceed the 3% level which will cause huge bond losses. The way the US interest rates go the rest of the world goes especially in the intertwined world we are living today.
10-year U.S. Treasuries are resting at 2.45% because the ECB and BOJ are buying $150 billion a month of their own bonds and much of that money then flows from 10 basis points JGBs and 45 basis point Bunds into 2.45% U.S. Treasuries. A $12 trillion global central bank balance sheet looks permanent and is growing at over $1 trillion a year, thanks to the ECB and the BOJ. Without that financial methadone, both bond and stock markets worldwide would sink and produce a tantrum of significant proportions. Gross believes that without QE from the ECB and BOJ that 10-year U.S. Treasuries would rather quickly rise to 3.5% and the U.S. economy would sink into recession. And with scarcity of supply of long-term government bonds the illiquidity is severely constraining the efficiency of the bond-buying program of the central banks in keeping interest rates down.
We see situations of upward pressure on interest rates in Europe with Italian interest rates rising from 1% in the beginning of September to 2.35% (+135%) on January 30, 2017. In Germany the pace of inflation more than doubled in December, driven by a surge in oil (low base effect). Consumer prices rose 1.7% from a year ago, recording the biggest jump on record according to the Federal Statistics Office in Wiesbaden. German interest rates rose from a negative 0.20% at the end of September to a positive 0.50% on January 30. And then we of course have the Japanese situation. Japans 10-year yield surged as traders judged the central banks recent expanded bond purchases of 450 billion yen ($4 billion) to be insufficient to cap borrowing costs as global rates continued rising and steepening around the globe. As a result the 10Y yield on the JGBs rose as much as 4 bps to 0.14% on February 2, 2017, the highest since January of 2016, the market was clearly hoping for even more. Furthermore there may be a scarcity in long-dated supply, arguably the stuff of Kurodas nightmares. We see the same situation of scarcity of supply everywhere and thus the failing of the central banks policies.
Italy worlds third largest bond market (2.2trn) could cause the dominos to fall
Italy is the third or fourth largest bond market in the world amounting to 2.2trn with bank NPLs (Non-Performing Loans) of 360bn and youth unemployment of 40%. Do you think that Italy raising 20bn and rescuing Monte Paschi with 8.8bn solves the Italian banking crisis? Think again what do you think what interest rates rising from 0.99% September 1, 2016 to 2.35% on January 30, 2017 are telling us. If it is risk or inflation doesnt really matter rates have more than doubled since September and I think we will see 4% in Italy before the end of 2017 worsening the Italian debt situation further.
Next to that without any stable Government, from 1945 to 1994 (49 years) Italy had 61 Governments, how much accountability do you think there really is and time to seriously tackle structural problems. On January 25, 2017 Italys Constitutional Court approved a new voting system based on proportional representation that raises the chance of an early election this summer whilst for the time being an interim cabinet has been appointed. On top of the Italian conundrum we have the elections in The Netherlands, March 13, France, April 23 and Germany, September 2017 that are clearly signifying a pull to the right, with people fed up with politicians and an islamitization of Europe, representing multiple potential exits from the EU which each can cause the break up of the EU with all its consequences.
The tools in the toolbox are getting exhausted and there is no plan B!
It should be clear by now that it looks like all the tools in the toolbox are getting exhausted and it feels like all these events are converging with the weakest chain (3% US Treasury rates, Chinas Yuan, Italys banks/bond market) snapping first subsequently followed by the lesser weak chains. This world is more interconnected than it has ever been (all banks hold billions of national and foreign government paper and international trade) in history and therefore the danger of a global ripple effect is more serious than ever. France for example holds in excess of 250bn of Italian bonds. And Germany stands out as the biggest creditor with net claims of 754.1bn. They can kiss goodbye to that money! Less than 4 years ago, and shortly after his infamous whatever it takes threat to speculators, Mario Draghi responded to a question, saying, there is no Plan B when it comes to contingency plans for a Eurozone nation leaving the monetary union. So much for that, he is basically saying bad luck if it doesnt work.
Draghi was also quoted saying that member states can exit the EU but first have to repay their debt. Though when like Italy you have 2.2trn in Government debt and a Debt/GDP ratio of 132%, youth unemployment of 40% and NPL 360bn+ explain to me how you are going to repay debt being Italy or any country for that sake? And when Italy reinstates the Lire how is this currency inheriting a huge debt load going to be well positioned to repay the huge Euro debt? Well in one quite simple answer it will not, it will further undermine the credibility of debt and the currencies. Conclusion ergo an exit of Italy out of the EU will cause huge debt defaults. And I dont believe investors will massively flee into the US dollar because an Italian exit will finally make investors aware that debt is debt and the situation isnt better in Japan, China or the US for that sake.
More
Gijsbert Groenewegen
THE PDF FILE OF THIS GREAT ARTICLE. PLEASE PRINT IT OUT AND READ IT AND SHARE IT !!!
http://www.321gold.com/editorials/gr...egen020917.pdf
COMMENTS FROM BENJAMINIS: I tried to copy and paste the 7 pages of the article and I am not able to, so I need to tell you that it MUST be read since the rest of the article lays out exactly how the World Financial system will collapse.
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http://traderfeed.blogspot.ca/2017/0...-and-when.html
Thursday, February 23, 2017
When Technical Analysis Works and When It Doesn't
https://3.bp.blogspot.com/-AKV6g54Pd...nce022317a.jpg
Above we see a chart of the ES futures going back to January 23rd (blue line) drawn from early this morning. A new data point is plotted every time we see 500 price changes in the contract. This means that the X axis is denominated in price movement (volatility) units, not in time units. When markets slow down (such as during overnight hours or at midday), we draw fewer "bars". When we see an upswing in movement, we draw a greater number of bars. Thus, when nothing is happening in the market, nothing is really happening in the chart.
The lookback period going to January 23rd is one that I identified as a stable market regime. In statistical terms, the distribution of prices over that period was stationary. I run simple tests in Excel to compare volume and buying/selling distributions within that lookback period to identify when we have a stable regime. Within stable regimes, we can use simple technical indicators, such as overbought/oversold measures, to help us identify candidate buy and sell areas. The overbought/oversold measure in red looks at how price deviates from its 50-bar average in standard deviation units.
As a rule, in a stable regime, I want to be a buyer of higher price lows (oversold areas where price remains higher than at the prior oversold levels) and a seller of lower price highs (overbought areas occurring at successively lower price highs). When the recent market is not stable (significant differences in participation and in the behavior of the participants), there is no a priori reason for believing that technical indicator readings drawn from the recent past will be relevant to the immediate future.
What that means in practice is that using standard preset levels on standard technical measures to derive trading signals in all markets is a very inefficient process. Much of the time, we'll be inappropriately extrapolating the past into the future. When those strategies yield (predictably) random results, traders become frustrated and then look to trading psychology to cure their woes. Clueless coaches are apt to provide those traders with less than helpful advice to "follow your process" and stay "disciplined" in trading. Slavish adherence to a random process will only yield consistently random results.
Technical analysis is like card counting in blackjack. It works if there is a constant number of decks from which cards are drawn. If the number of decks in the shoe changes randomly, knowing the number of face cards played in the recent past will not provide information about the number likely to show up in the future. If there is a relatively constant set of participants in the marketplace and their buying and selling activity falls within stable parameters, we can make a reasonable inference as to the probability of forthcoming buying or selling.
The smart trader is not looking for where to buy or sell. The smart trader is looking to see if the current market activity is stable relative to the activity of the recent past. The smart trader watches the dealer and figures out when card counting truly yields a betting edge.
Further Reading: A Dynamic Approach to Technical Analysis
.
Posted by
Brett Steenbarger, Ph.D. at 4:38 AM
Thursday, February 23, 2017
When Technical Analysis Works and When It Doesn't
https://3.bp.blogspot.com/-AKV6g54Pd...nce022317a.jpg
Above we see a chart of the ES futures going back to January 23rd (blue line) drawn from early this morning. A new data point is plotted every time we see 500 price changes in the contract. This means that the X axis is denominated in price movement (volatility) units, not in time units. When markets slow down (such as during overnight hours or at midday), we draw fewer "bars". When we see an upswing in movement, we draw a greater number of bars. Thus, when nothing is happening in the market, nothing is really happening in the chart.
The lookback period going to January 23rd is one that I identified as a stable market regime. In statistical terms, the distribution of prices over that period was stationary. I run simple tests in Excel to compare volume and buying/selling distributions within that lookback period to identify when we have a stable regime. Within stable regimes, we can use simple technical indicators, such as overbought/oversold measures, to help us identify candidate buy and sell areas. The overbought/oversold measure in red looks at how price deviates from its 50-bar average in standard deviation units.
As a rule, in a stable regime, I want to be a buyer of higher price lows (oversold areas where price remains higher than at the prior oversold levels) and a seller of lower price highs (overbought areas occurring at successively lower price highs). When the recent market is not stable (significant differences in participation and in the behavior of the participants), there is no a priori reason for believing that technical indicator readings drawn from the recent past will be relevant to the immediate future.
What that means in practice is that using standard preset levels on standard technical measures to derive trading signals in all markets is a very inefficient process. Much of the time, we'll be inappropriately extrapolating the past into the future. When those strategies yield (predictably) random results, traders become frustrated and then look to trading psychology to cure their woes. Clueless coaches are apt to provide those traders with less than helpful advice to "follow your process" and stay "disciplined" in trading. Slavish adherence to a random process will only yield consistently random results.
Technical analysis is like card counting in blackjack. It works if there is a constant number of decks from which cards are drawn. If the number of decks in the shoe changes randomly, knowing the number of face cards played in the recent past will not provide information about the number likely to show up in the future. If there is a relatively constant set of participants in the marketplace and their buying and selling activity falls within stable parameters, we can make a reasonable inference as to the probability of forthcoming buying or selling.
The smart trader is not looking for where to buy or sell. The smart trader is looking to see if the current market activity is stable relative to the activity of the recent past. The smart trader watches the dealer and figures out when card counting truly yields a betting edge.
Further Reading: A Dynamic Approach to Technical Analysis
.
Posted by
Brett Steenbarger, Ph.D. at 4:38 AM
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EUR/USD: Bullish S/T Targeting 1.08; USD/JPY: Bearish S/T Targeting 111 - BTMU
23 Feb 2017 12:55 EDT
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FX Strategy
Bank of Tokyo Mitsubishi UFJ
EUR/USD – BULLISH BIAS – (1.0450-1.0800)
Again, like above, there are no obvious risk events to focus on in the week ahead and hence our inclination is to give the current momentum greater influence in the bias for the week ahead. We don’t really agree with selling the dollar on the back of the FOMC minutes but the softer dollar momentum might have legs given there is nothing to necessarily alter that for now – certainly not from a global macro perspective. Of course, the obvious risk the other way is that French political risk escalates again and we see that drag the euro lower. Opinion polls will be key in that.
The key piece of data is perhaps the flash estimate for CPI and core CPI on 28th February. The data from the euro-zone has clearly improved although the core annual CPI rate remains stuck at 0.9%. Any upside surprise there would reinforce expectations of the ECB tapering QE later this year and would help provide support for the euro. Still, upside momentum is unlikely to be strong given the scale of uncertainty lingering in Europe.
USD/JPY – BEARISH BIAS – (111.00-114.50)
The calendar is relatively light for the week ahead and there are no clear-cut obvious events that could prompt market volatility in the week ahead. The FOMC minutes have been classed by the market as more on the dovish side and while we would question how long that conclusion will last, there is certainly scope for it to last over the relatively short period of a week when there are no major data releases or events to alter sentiment.
Fed President Kaplan (voter), Bullard (non-voter), Williams (nonvoter) and Mester (non-voter) all speak over the period through to next Thursday but the key US data will probably be the PCE inflation data released on 1st March. The payrolls will not be released as usual on the first Friday due to the shorter February and hence will not be released until 10th March. Event risk appears more skewed toward risk aversion if political risks intensify in Europe again and hence yen strength is our bias for the week ahead, especially when coupled with the current momentum in the wake of the FOMC minutes.
Copyright 2017 BTMU, eFXnews
COMMENTS FROM BENJAMINIS: All accurate and good information and opinion above however the one factor not included is the possibility that finally US 30 and SPX500 will sell off and possibly now because of the Treasury Secretary today stating that Tax Cuts might not come before the August recess. That did not play good and the US Dollar Index needs to hold above 99.00 so we shall see what Friday and Monday brings.
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- Feb 23, 2017 10:13pm Feb 23, 2017 10:13pm
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http://traderfeed.blogspot.ca/2014/0...technical.html
Sunday, June 15, 2014
Toward a Dynamic Approach to Technical Analysis
http://4.bp.blogspot.com/-LcXeizJRXI...00/Dynamic.jpg
In my recent post, I suggested that a dynamic technical analysis would not rely upon a fixed set of indicators and chart patterns to be interpreted in a uniform manner. Rather, fresh predictors would arise from a study of drivers impacting the most recent market regimes. Traders would follow the indicators that have demonstrated predictive accuracy; not untested ones presumed to possess universal validity.
Let's take an example from the current market. Using tests of stationarity, I have identified a stable period of market behavior embracing the recent past. That stability means that market price changes during that period can be assumed to proceed from a single process. If the time period under consideration possessed wildly different statistical properties, such as 2008 and 2014 for stocks, then there would be no assurance that price changes were resulting from a stable process. That would give us no reason to extrapolate patterns from one period to the other.
A major problem with traditional use of technical indicators is that they are employed uniformly across non-stationary periods--especially intraday.
It turns out that during the most recent stationary period (i.e., "regime") a major driver of short-term price has been correlation. How SPX is correlated with other equity instruments has been significantly predictive of short-term forward price change.
The catch is that single measures of correlation were not particularly informative in my research. Rather, aggregated correlations across a large number of stocks and sectors and over intraday horizons ended up being an excellent measure for short-term trading signals. In other words, the most valuable indicator of correlation was not a standard technical indicator, but rather a measure that required research. Moreover, I had to research it in such a way as to not overfit the data relationship.
But there it is: when the correlation measure exceeds .40, the next day's price change has averaged +.35%. When the correlation has been below .40, the next day's price change has averaged -.37%. As long as we stay in the current regime--a key assumption--I expect market strength when correlations are high and rising and weakness when they are low and falling.
That becomes a potential trading "setup" for the current regime. In a future regime, correlation may be much more modestly associated with forward price change--or it may be predictive over longer time frames. Setups become dynamic, because they adapt to changing markets.
But correlation is but one factor that sets up in the current regime. There are others, from options ratios to intraday volatility.
This is how many hours of preparation go into a single hour of trading. It takes time to create and test large correlation matrices. It also takes time to test the many other variables that are associated with the factors of sentiment and positioning that are key drivers in the current regime. Once the research is done, however, the trader knows the indicator levels that are significant and is able to automate alerts. That way, the trader can seamlessly incorporate multiple tested technical signals with his or her discretionary judgment about the market.
The challenge is not that technical analysis doesn't work. The problem is that technical analysis works the way that parenting works: powerful when dynamically adapted to situations; diluted when applied uncritically.
.
Posted by
Brett Steenbarger, Ph.D. at 4:42 PM
Comments from Benjaminis: The most striking part of this excellent article for me is what Brett says about CORRELATION.
It turns out that during the most recent stationary period (i.e., "regime") a major driver of short-term price has been correlation. How SPX is correlated with other equity instruments has been significantly predictive of short-term forward price change.
That is exactly what we do. We use the MONEY FLOW causes by the movement in the Asset Classes confirmed by CORRELATION.
All Feedback is welcome. My Forex trading day has ended and now time for some rest.
Sunday, June 15, 2014
Toward a Dynamic Approach to Technical Analysis
http://4.bp.blogspot.com/-LcXeizJRXI...00/Dynamic.jpg
In my recent post, I suggested that a dynamic technical analysis would not rely upon a fixed set of indicators and chart patterns to be interpreted in a uniform manner. Rather, fresh predictors would arise from a study of drivers impacting the most recent market regimes. Traders would follow the indicators that have demonstrated predictive accuracy; not untested ones presumed to possess universal validity.
Let's take an example from the current market. Using tests of stationarity, I have identified a stable period of market behavior embracing the recent past. That stability means that market price changes during that period can be assumed to proceed from a single process. If the time period under consideration possessed wildly different statistical properties, such as 2008 and 2014 for stocks, then there would be no assurance that price changes were resulting from a stable process. That would give us no reason to extrapolate patterns from one period to the other.
A major problem with traditional use of technical indicators is that they are employed uniformly across non-stationary periods--especially intraday.
It turns out that during the most recent stationary period (i.e., "regime") a major driver of short-term price has been correlation. How SPX is correlated with other equity instruments has been significantly predictive of short-term forward price change.
The catch is that single measures of correlation were not particularly informative in my research. Rather, aggregated correlations across a large number of stocks and sectors and over intraday horizons ended up being an excellent measure for short-term trading signals. In other words, the most valuable indicator of correlation was not a standard technical indicator, but rather a measure that required research. Moreover, I had to research it in such a way as to not overfit the data relationship.
But there it is: when the correlation measure exceeds .40, the next day's price change has averaged +.35%. When the correlation has been below .40, the next day's price change has averaged -.37%. As long as we stay in the current regime--a key assumption--I expect market strength when correlations are high and rising and weakness when they are low and falling.
That becomes a potential trading "setup" for the current regime. In a future regime, correlation may be much more modestly associated with forward price change--or it may be predictive over longer time frames. Setups become dynamic, because they adapt to changing markets.
But correlation is but one factor that sets up in the current regime. There are others, from options ratios to intraday volatility.
This is how many hours of preparation go into a single hour of trading. It takes time to create and test large correlation matrices. It also takes time to test the many other variables that are associated with the factors of sentiment and positioning that are key drivers in the current regime. Once the research is done, however, the trader knows the indicator levels that are significant and is able to automate alerts. That way, the trader can seamlessly incorporate multiple tested technical signals with his or her discretionary judgment about the market.
The challenge is not that technical analysis doesn't work. The problem is that technical analysis works the way that parenting works: powerful when dynamically adapted to situations; diluted when applied uncritically.
.
Posted by
Brett Steenbarger, Ph.D. at 4:42 PM
Comments from Benjaminis: The most striking part of this excellent article for me is what Brett says about CORRELATION.
It turns out that during the most recent stationary period (i.e., "regime") a major driver of short-term price has been correlation. How SPX is correlated with other equity instruments has been significantly predictive of short-term forward price change.
That is exactly what we do. We use the MONEY FLOW causes by the movement in the Asset Classes confirmed by CORRELATION.
All Feedback is welcome. My Forex trading day has ended and now time for some rest.
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- Feb 23, 2017 10:18pm Feb 23, 2017 10:18pm
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From My Post 2050 and On Topic of my last few posts. Good Night !!!
I have a very important statement to make and I start by posting the following two excellent charts that I just looked at on the EUR/USD thread just now.
http://www.forexfactory.com/attachme...0&d=1487164487
http://www.forexfactory.com/attachme...4&d=1487165110
I do not think that I have seen more detailed and excellent charts than these two.
I have a very important statement to make and I start by posting the following two excellent charts that I just looked at on the EUR/USD thread just now.
http://www.forexfactory.com/attachme...0&d=1487164487
http://www.forexfactory.com/attachme...4&d=1487165110
I do not think that I have seen more detailed and excellent charts than these two.
- Ata-Turkoglu
- Joined May 2014 | Status: Full Time Trader | 3,130 Posts
H4 Chart Update..
We are almost there.. once cypher is complete I will look for bearish weakness.. for now the only clue I have is the MACD divergence on 15m, 30m and H1 charts.. and bulls started pushing inside these hours.. let's see when bears will hit overall targets at 1.0520/30 area..
Stay Green
Here is the comments that went along with the charts.
- sakisf
- Joined Sep 2013 | Status: puppy | 2,112 Posts | Invisible
Waiting for 1.049xx to buy. Stopped buying at 1.0620 broken, maybe it's time after news spike down.
edit: or maybe not...
I strongly state and share these thoughts. By fixating on the charts you fall into a trap that almost guarantees that you cannot ever become a professional currency trader. Of course some can and do make money having found a method within the charts that allows them to achieve some monetary success. However this is not what it is all about.
Perhaps before the financial meltdown in 2008 trading could be done much more successfully however now in these times it is close to impossible to trade with any certainty and make substantial profits.
I am in NO WAY making my comments personal towards anyone. This is not a contest of EGO as to whom is right or wrong. This is about making money with certainty.
We know where each of the currency pairs that we trade will go. We have NO DOUBT , however we cannot call the timing as only the markets know the timing however as the MONEY starts to Flow at 9:30 AM Eastern Standard Time in the North America Equity Markets and the MONEY stops flowing in the Europe Equity Markets at 11:30 AM Eastern Standard Time the volume decreases of course.
Trading without Money Management or Risk Management is a GUARANTEE of financial loss. Using a form of Money Management by trading small units also is a GUARANTEE of failure since in times like today if you trade against the TREND then you will lose your money.
You must have an EDGE and what better EDGE than to know what happens when we have either RISK ON or RISK OFF.
There is one person on the EUR/USD thread that has 100% convinced himself that the news has no effect on the Elliot Wave Charts. Of course that makes no Common Sense however it also leads to failure.
I wanted to share this with everyone since it is what it is and unless you understand all the issues and have the knowledge and DISCIPLINE than you will not become a successful and profitable Forex Currency Trader.
Last night or early this morning I posted the following information and it completes my thoughts this morning of the proper way to learn how to trade properly and learn properly and so with that in mind here it is to read again.
http://traderfeed.blogspot.ca/2017/0...s-happens.html
TUESDAY, FEBRUARY 14, 2017
How Trading Success Happens
https://4.bp.blogspot.com/-H31LxbwWL...omeAcquire.jpg
When I first began working with traders, my central insight was that trading is a performance activity. What makes for trading success is not so different from what makes for success in other performance fields, whether they be performing arts, athletics, chess, or surgery. In each of these fields, the star performer begins with certain inborn talents and then refines those through a process of training, mentoring, and coaching. Training and mentoring build knowledge and skills and accelerate the learning process. Coaching provides guidance and helps performers channel their talents and skills to where they can be most successfully applied. Long before elite performers acquire fame or fortune, they spend long hours in becoming. Their focus is on improvement, the refinement of skills, and the development of new ones--not on the the trappings of success.
There are few, far too few, places where developing traders can benefit from the thoughtful integration of training, mentoring, and coaching. It's one reason I've been such a fan of the building of teams within trading firms. Those teams enable senior traders to benefit from the work of junior traders, and they provide hands-on learning, mentoring, and coaching for those juniors. The learning takes place on the desk, just as an athlete's learning takes place on the field--in practice and during games.
No one expects an athlete to develop by reading books, taking classes, or practicing on their own. No one develops as a performing artist by writing in journals and trying out different songs or plays. In performance fields, aspiring performers learn from experienced performers and those knowledgeable about the performance domain. Medical students are trained at the bedside by practicing physicians; chess players hone their talents in academies run by chess masters and grandmasters.
If I were looking to become successful in the trading world, I would learn some skills and/or develop some area of expertise that would make me valuable to a trading team or firm. I would then contribute my skills to that team and learn everything they're doing that makes them successful. Over time, I would integrate my abilities and experience with what I've learned to develop my own path to success--and then I would cement that learning/development by serving as a mentor for a new generation of juniors who could in turn make me better.
I've worked with many individuals, many trading teams, and many trading firms. That is how success happens.
Further Reading: The Foundation of Trading Success
.Posted by Brett Steenbarger, Ph.D.
Take care and be well and enjoy your life.
Benjamin
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- Feb 24, 2017 7:11am Feb 24, 2017 7:11am
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Morning Thoughts - Daily
http://economicprism.com/
The Dow Speaks: In Trump We Trust!
Posted on February 24, 2017 by MN Gordon
http://economicprism.com/wp-content/...2/02/Chart.jpgThe rewards of being the President, these days, are few and far between. Just ask President Trump. The work hours are terrible, the pay is far less than that of a corporate CEO, and youre endlessly surrounded by shabby politicians.
Whats more, the hand towels aboard Air Force One have the shoddy over washed roughness of those at a turnpike Motel 6. But thats not the worst of it.
Any and all efforts to remake foreign policy to address the threats of the 21st century not the 20th century are undermined by the intelligence community with vehement efficiency. Before you can say Jack Robinson, the leaky conduit to the mainstream media boils up the latest brouhaha to simmering pot.
Last week, for example, Trump had to fire his national security adviser for engaging in statesmanship with the Russians. Then, after that, John McCain a Class A ignoramus went and kvetched about Trumps efforts from Europe. Good grief!
With the exception of being a flatus odor judge, we cant think of a stinkier job than being the President of the United States. Can you? Continue reading →
Posted in MN Gordon, Stock Market | Tagged DOW, mania, president trump, S&P500, wall street panic | Leave a comment
The Art and Pseudoscience of Monetary Policy
Posted on February 17, 2017 by MN Gordon
http://economicprism.com/wp-content/...ralReserve.jpgEveryones got a plan for sale these days. In fact, there are so many plans out there we cannot keep up with them all. Eat celery sticks and lose weight. Think and grow rich. Stocks for the long run. Naturally, plans like these run a dime a dozen.
Good plans, however, are scarcer than hens teeth. You cant possibly see them no matter how closely you look. They simply dont exist.
This was the case on Capitol Hill this week, where money and politics collided at the biannual monetary policy gala. Despite all the hubbub, no good plans were offered. Whats more, on first glance, no bad plans were offered too.
When Fed Chair Janet Yellens testimony was finally over, Congress knew less about the Feds plans than when it started. For instance, when asked if the Federal Reserve would raise rates next month, Fed Chair Janet Yellen replied, I cant tell you exactly which meeting it would be. I would say every meeting is live.
What does this mean, really? Continue reading →
Posted in Inflation, MN Gordon | Tagged consumer price index, government meddling, interest rate, janet yellen, pseudoscience | 1 Comment
When Trumponomics Meets Abenomics
Posted on February 10, 2017 by MN Gordon
http://economicprism.com/wp-content/...apaneseYen.jpgWhat will President Trump and Japanese Prime Minister Shinzo Abe talk about when they meet later today? Will they gab about what fishing holes the big belly bass are biting at? Will they share insider secrets on what watering holes are serving up the stiffest drinks?
Indeed, these topics are unlikely. Rather, what theyll be discussing is cooperative trade, growth, and employment policies between their respective national economies. Theyll also talk about currency debasement opportunities.
Soon enough, perhaps by the time you read this, youll be able to peruse the headlines and garner soundbites of their discussions. Maybe a new partnership will be announced. Anythings possible.
Regardless, what follows is a brief review a thirty year retread thats intended to put the meeting within its proper context. This is the backstory you wont hear anywhere else
To begin, it was precisely the wrong thing to do at precisely the wrong time. Continue reading →
Posted in MN Gordon, Politics | Tagged abenomics, louvre accord, plaza accord, trade imbalance, trumponomics | 7 Comments
Dont Blame Trump When the World Ends
Posted on February 3, 2017 by MN Gordon
http://economicprism.com/wp-content/...6/11/Trump.jpgThere was, indeed, a time when clear thinking and lucid communication via the written word were held in high regard. As far as we can tell, this wonderful epoch concluded in 1936. Everything since has been tortured with varying degrees of gobbledygook.
The fall from grace was triggered by the 1936 publication of John Maynard Keynes The General Theory of Employment, Interest and Money. The book is rigorously indecipherable. Whats more, it has the ill-effect of making those who read it dumber.
Nonetheless, politicians and establishment economists remain enamored with Keynes gibberish. For it offers academic rationale for governments to do what they love to do most borrow money and spend it on inane programs. In particular, Keynes advocated filling bottles with money and burying them in coalmines for people to dig up as a way to end unemployment. Somehow, this public works egg hunt would make everyone rich.
COMMENTS FROM BENJAMINIS: The information above is for reading if you have any interest to learn and understand however this morning we have reached a TURNING POINT. You will understand after reading the article that CAPTURED my Morning Thoughts.
To Start we have RISK ON this morning and I will explain why at the end of this article.
http://economicprism.com/the-dow-spe...rump-we-trust/
← The Art and Pseudoscience of Monetary Policy
The Dow Speaks: In Trump We Trust!
Posted on February 24, 2017 by MN Gordon
http://economicprism.com/wp-content/...2/02/Chart.jpgThe rewards of being the President, these days, are few and far between. Just ask President Trump. The work hours are terrible, the pay is far less than that of a corporate CEO, and youre endlessly surrounded by shabby politicians.
Whats more, the hand towels aboard Air Force One have the shoddy over washed roughness of those at a turnpike Motel 6. But thats not the worst of it.
Any and all efforts to remake foreign policy to address the threats of the 21st century not the 20th century are undermined by the intelligence community with vehement efficiency. Before you can say Jack Robinson, the leaky conduit to the mainstream media boils up the latest brouhaha to simmering pot.
Last week, for example, Trump had to fire his national security adviser for engaging in statesmanship with the Russians. Then, after that, John McCain a Class A ignoramus went and kvetched about Trumps efforts from Europe. Good grief!
With the exception of being a flatus odor judge, we cant think of a stinkier job than being the President of the United States. Can you?
Theres little privacy. Newspapers across the planet psychoanalyze your every facial expression; many conclude youre mentally ill. You can hardly wander the halls of your own home in your bathrobe during night hours no less without it making front page news.
Wild and Wacky Markets
Yet, despite all this, has there ever been a President before President Trump who made the job look so doggone fun? In all seriousness, what could be more fun than getting paid to look CNNs Jim Acosta in the eyes and tell him that CNN will no longer be referred to as fake news; but rather, as very fake news? As far as we can tell, Trumps having a rip-roaring good time.
Indeed, publicly roasting the mainstream media calling them the enemy of the American people must be one of the few redeeming perks of the job. But, on balance, the advantages of being leader of the free world come up short when compared to nearly all other gigs.
COMMENTS FROM BENJAMINIS: I have explained many times about PERCEPTION (MARKETS) Markets are always RIGHT until they are NOT (REALITY)
The words below now is the REALITY !!!
Where markets are concerned, in these early days of the President Trump era, wild and wacky occurrences have become the norm. The DOW, S&P 500, and NASDAQ all set new highs practically every day. In fact, this week the DOW marked its 10th record close in a row.
PERCEPTION NOT REALITY !!!
You have to go back over 30 years to find the last time the DOW pulled off such an achievement. Its breathtaking. But thats not the half of it. The DOWs jumped and jived in ways that have broken the bounds of what market technicians thought were possible.
PERCEPTION NOT REALITY !!!
On Wednesday, if you werent aware, the Dow closed 2,000 points above its 200-day moving average. For perspective, the last time this happenedwas never. In other words, in the Dows 120-year history this has never, ever happened. What to make of it?
COMMENTS FROM BENJAMINIS: We can now see exactly what I have been teaching in REAL TIME. So much for charts , 2000 POINTS above it's 200-day moving average (NEVER)
The Dow Speaks: In Trump We Trust!
Every suspicion inside of us, from our brain to our gut to our big toe, says stocks shouldve crashed long ago. They are overvalued to the extreme by all valuation measurements.
The S&P 500s Shiller price-to-earnings ratio was 29.29 at yesterdays close of market. Thats well above its 16.72 long term average. Likewise, the Buffett indicator market capitalization to gross national product ended the day at 130.7 percent. This is considered significantly overvalued.
PERCEPTION NOT REALITY !!!
Certainly a crash is eventual, but is it imminent?
Never in our lives can we recall of a market that over appreciated the abilities of one man to the extent of todays market. The words spoken by the Dow are, In Trump We Trust!
PERCEPTION NOT REALITY !!!
Expectations of forthcoming tax cuts, deregulations, and prospects for faster economic growth, including corporate earnings growth, have been priced into the market as if its a done deal.
Who knows? Maybe it is a done deal. President Trump has achieved the impossible before. Who are we to say he wont do it again?
But, on the other hand, what if Trumps unable to his push tax cuts through Congress? Or what if his efforts to bring jobs back to America start a trade war?
What tune will the Dow be singing then?
We can already envision the teeth gnashing panic that will erupt on Wall Street when investors realize, en masse, that theyve pushed the market well out over the ledge. Our advice, make an Irish exit from the party now while you still can.
Sincerely,
MN Gordon
for Economic Prism
Return from The Dow Speaks: In Trump We Trust! to Economic Prism
COMMENTS FROM BENJAMINIS: What was the EVENT Yesterday that turned things from RISK ON to RISK OFF ?
When the new Treasury Secretary spoke publically and suggested that TAX CUTS might happen by the August 2017 Recess of Congress that was the BEGINNING OF THE END. Now we have confusion by the Republicans over OBAMACARE. During March 2017 we have the MAJOR PROBLEM of the Debt Ceiling and so now we get to a new stage.
Please post your questions and your comments since this is a very important post as now it is easy to understand what I have been teaching about PERCEPTION (MARKETS) and REALITY (FUNDAMENTALS) Now you can understand why I post so much information about fundamentals from all points of view so WE can understand and know the REALITY and by seeing the BIGGER PICTURE we are better informed then in many cases some of the world's best economists that live in a Glass Bubble. Here is part of my post from yesterday from Zerohedge, that confirms the point about MARKET MANIPULATION and FREE MARKETS.
http://www.zerohedge.com/news/2017-0...ops+to+zero%29
by Tyler Durden
Feb 23, 2017 4:03 PM
Mnuchin hit the reset button and then asset gatherers spent the day like this...
The Dow topped 20,800 shrugging off any fears from Mnuchin...thanks to a VIX slam...
http://www.zerohedge.com/sites/defau...23_EOD16_0.jpg
Have A GREAT WEEKEND and please put on your seat belts because we are entering a VERY ROCKY ROAD AHEAD.
http://economicprism.com/
The Dow Speaks: In Trump We Trust!
Posted on February 24, 2017 by MN Gordon
http://economicprism.com/wp-content/...2/02/Chart.jpgThe rewards of being the President, these days, are few and far between. Just ask President Trump. The work hours are terrible, the pay is far less than that of a corporate CEO, and youre endlessly surrounded by shabby politicians.
Whats more, the hand towels aboard Air Force One have the shoddy over washed roughness of those at a turnpike Motel 6. But thats not the worst of it.
Any and all efforts to remake foreign policy to address the threats of the 21st century not the 20th century are undermined by the intelligence community with vehement efficiency. Before you can say Jack Robinson, the leaky conduit to the mainstream media boils up the latest brouhaha to simmering pot.
Last week, for example, Trump had to fire his national security adviser for engaging in statesmanship with the Russians. Then, after that, John McCain a Class A ignoramus went and kvetched about Trumps efforts from Europe. Good grief!
With the exception of being a flatus odor judge, we cant think of a stinkier job than being the President of the United States. Can you? Continue reading →
Posted in MN Gordon, Stock Market | Tagged DOW, mania, president trump, S&P500, wall street panic | Leave a comment
The Art and Pseudoscience of Monetary Policy
Posted on February 17, 2017 by MN Gordon
http://economicprism.com/wp-content/...ralReserve.jpgEveryones got a plan for sale these days. In fact, there are so many plans out there we cannot keep up with them all. Eat celery sticks and lose weight. Think and grow rich. Stocks for the long run. Naturally, plans like these run a dime a dozen.
Good plans, however, are scarcer than hens teeth. You cant possibly see them no matter how closely you look. They simply dont exist.
This was the case on Capitol Hill this week, where money and politics collided at the biannual monetary policy gala. Despite all the hubbub, no good plans were offered. Whats more, on first glance, no bad plans were offered too.
When Fed Chair Janet Yellens testimony was finally over, Congress knew less about the Feds plans than when it started. For instance, when asked if the Federal Reserve would raise rates next month, Fed Chair Janet Yellen replied, I cant tell you exactly which meeting it would be. I would say every meeting is live.
What does this mean, really? Continue reading →
Posted in Inflation, MN Gordon | Tagged consumer price index, government meddling, interest rate, janet yellen, pseudoscience | 1 Comment
When Trumponomics Meets Abenomics
Posted on February 10, 2017 by MN Gordon
http://economicprism.com/wp-content/...apaneseYen.jpgWhat will President Trump and Japanese Prime Minister Shinzo Abe talk about when they meet later today? Will they gab about what fishing holes the big belly bass are biting at? Will they share insider secrets on what watering holes are serving up the stiffest drinks?
Indeed, these topics are unlikely. Rather, what theyll be discussing is cooperative trade, growth, and employment policies between their respective national economies. Theyll also talk about currency debasement opportunities.
Soon enough, perhaps by the time you read this, youll be able to peruse the headlines and garner soundbites of their discussions. Maybe a new partnership will be announced. Anythings possible.
Regardless, what follows is a brief review a thirty year retread thats intended to put the meeting within its proper context. This is the backstory you wont hear anywhere else
To begin, it was precisely the wrong thing to do at precisely the wrong time. Continue reading →
Posted in MN Gordon, Politics | Tagged abenomics, louvre accord, plaza accord, trade imbalance, trumponomics | 7 Comments
Dont Blame Trump When the World Ends
Posted on February 3, 2017 by MN Gordon
http://economicprism.com/wp-content/...6/11/Trump.jpgThere was, indeed, a time when clear thinking and lucid communication via the written word were held in high regard. As far as we can tell, this wonderful epoch concluded in 1936. Everything since has been tortured with varying degrees of gobbledygook.
The fall from grace was triggered by the 1936 publication of John Maynard Keynes The General Theory of Employment, Interest and Money. The book is rigorously indecipherable. Whats more, it has the ill-effect of making those who read it dumber.
Nonetheless, politicians and establishment economists remain enamored with Keynes gibberish. For it offers academic rationale for governments to do what they love to do most borrow money and spend it on inane programs. In particular, Keynes advocated filling bottles with money and burying them in coalmines for people to dig up as a way to end unemployment. Somehow, this public works egg hunt would make everyone rich.
COMMENTS FROM BENJAMINIS: The information above is for reading if you have any interest to learn and understand however this morning we have reached a TURNING POINT. You will understand after reading the article that CAPTURED my Morning Thoughts.
To Start we have RISK ON this morning and I will explain why at the end of this article.
http://economicprism.com/the-dow-spe...rump-we-trust/
← The Art and Pseudoscience of Monetary Policy
The Dow Speaks: In Trump We Trust!
Posted on February 24, 2017 by MN Gordon
http://economicprism.com/wp-content/...2/02/Chart.jpgThe rewards of being the President, these days, are few and far between. Just ask President Trump. The work hours are terrible, the pay is far less than that of a corporate CEO, and youre endlessly surrounded by shabby politicians.
Whats more, the hand towels aboard Air Force One have the shoddy over washed roughness of those at a turnpike Motel 6. But thats not the worst of it.
Any and all efforts to remake foreign policy to address the threats of the 21st century not the 20th century are undermined by the intelligence community with vehement efficiency. Before you can say Jack Robinson, the leaky conduit to the mainstream media boils up the latest brouhaha to simmering pot.
Last week, for example, Trump had to fire his national security adviser for engaging in statesmanship with the Russians. Then, after that, John McCain a Class A ignoramus went and kvetched about Trumps efforts from Europe. Good grief!
With the exception of being a flatus odor judge, we cant think of a stinkier job than being the President of the United States. Can you?
Theres little privacy. Newspapers across the planet psychoanalyze your every facial expression; many conclude youre mentally ill. You can hardly wander the halls of your own home in your bathrobe during night hours no less without it making front page news.
Wild and Wacky Markets
Yet, despite all this, has there ever been a President before President Trump who made the job look so doggone fun? In all seriousness, what could be more fun than getting paid to look CNNs Jim Acosta in the eyes and tell him that CNN will no longer be referred to as fake news; but rather, as very fake news? As far as we can tell, Trumps having a rip-roaring good time.
Indeed, publicly roasting the mainstream media calling them the enemy of the American people must be one of the few redeeming perks of the job. But, on balance, the advantages of being leader of the free world come up short when compared to nearly all other gigs.
COMMENTS FROM BENJAMINIS: I have explained many times about PERCEPTION (MARKETS) Markets are always RIGHT until they are NOT (REALITY)
The words below now is the REALITY !!!
Where markets are concerned, in these early days of the President Trump era, wild and wacky occurrences have become the norm. The DOW, S&P 500, and NASDAQ all set new highs practically every day. In fact, this week the DOW marked its 10th record close in a row.
PERCEPTION NOT REALITY !!!
You have to go back over 30 years to find the last time the DOW pulled off such an achievement. Its breathtaking. But thats not the half of it. The DOWs jumped and jived in ways that have broken the bounds of what market technicians thought were possible.
PERCEPTION NOT REALITY !!!
On Wednesday, if you werent aware, the Dow closed 2,000 points above its 200-day moving average. For perspective, the last time this happenedwas never. In other words, in the Dows 120-year history this has never, ever happened. What to make of it?
COMMENTS FROM BENJAMINIS: We can now see exactly what I have been teaching in REAL TIME. So much for charts , 2000 POINTS above it's 200-day moving average (NEVER)
The Dow Speaks: In Trump We Trust!
Every suspicion inside of us, from our brain to our gut to our big toe, says stocks shouldve crashed long ago. They are overvalued to the extreme by all valuation measurements.
The S&P 500s Shiller price-to-earnings ratio was 29.29 at yesterdays close of market. Thats well above its 16.72 long term average. Likewise, the Buffett indicator market capitalization to gross national product ended the day at 130.7 percent. This is considered significantly overvalued.
PERCEPTION NOT REALITY !!!
Certainly a crash is eventual, but is it imminent?
Never in our lives can we recall of a market that over appreciated the abilities of one man to the extent of todays market. The words spoken by the Dow are, In Trump We Trust!
PERCEPTION NOT REALITY !!!
Expectations of forthcoming tax cuts, deregulations, and prospects for faster economic growth, including corporate earnings growth, have been priced into the market as if its a done deal.
Who knows? Maybe it is a done deal. President Trump has achieved the impossible before. Who are we to say he wont do it again?
But, on the other hand, what if Trumps unable to his push tax cuts through Congress? Or what if his efforts to bring jobs back to America start a trade war?
What tune will the Dow be singing then?
We can already envision the teeth gnashing panic that will erupt on Wall Street when investors realize, en masse, that theyve pushed the market well out over the ledge. Our advice, make an Irish exit from the party now while you still can.
Sincerely,
MN Gordon
for Economic Prism
Return from The Dow Speaks: In Trump We Trust! to Economic Prism
COMMENTS FROM BENJAMINIS: What was the EVENT Yesterday that turned things from RISK ON to RISK OFF ?
When the new Treasury Secretary spoke publically and suggested that TAX CUTS might happen by the August 2017 Recess of Congress that was the BEGINNING OF THE END. Now we have confusion by the Republicans over OBAMACARE. During March 2017 we have the MAJOR PROBLEM of the Debt Ceiling and so now we get to a new stage.
Please post your questions and your comments since this is a very important post as now it is easy to understand what I have been teaching about PERCEPTION (MARKETS) and REALITY (FUNDAMENTALS) Now you can understand why I post so much information about fundamentals from all points of view so WE can understand and know the REALITY and by seeing the BIGGER PICTURE we are better informed then in many cases some of the world's best economists that live in a Glass Bubble. Here is part of my post from yesterday from Zerohedge, that confirms the point about MARKET MANIPULATION and FREE MARKETS.
http://www.zerohedge.com/news/2017-0...ops+to+zero%29
by Tyler Durden
Feb 23, 2017 4:03 PM
Mnuchin hit the reset button and then asset gatherers spent the day like this...
The Dow topped 20,800 shrugging off any fears from Mnuchin...thanks to a VIX slam...
http://www.zerohedge.com/sites/defau...23_EOD16_0.jpg
Have A GREAT WEEKEND and please put on your seat belts because we are entering a VERY ROCKY ROAD AHEAD.
1
- Post #2,158
- Quote
- Feb 24, 2017 7:32am Feb 24, 2017 7:32am
- | Commercial Member | Joined Dec 2014 | 11,709 Posts | Online Now
http://www.zerohedge.com/news/2017-0...ops+to+zero%29
Trader: "The Next Market Phase May Be Dominated By Genuine Disappointment"
http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Feb 24, 2017 6:04 AM
By Mark Cudmore, a former FX trader who writes for Bloomberg
Mnuchins Dose of Reality Yet to Bite
Steven Mnuchins dose of reality for investors in relation to the fiscal stimulus has triggered a disinflationary theme to markets that will impact many assets classes.
Yesterday, I wrote that Trumps speech to congress on Tuesday may mark a capitulation point for reflation trades. It appears that Mnuchin has tried to pre-empt him.
Amid comments on a wide array of financially relevant topics, markets should really be focusing on his admission that the stimulus wont help the economy much this year and the confirmation that passage of tax reform is unlikely to be imminent.
He reiterated that the administration is committed to an overhaul of the tax system by August. Thats still farther away than many investors had hoped for, and even that highly aggressive timeline is unachievable according to Beacon Policy Advisors.
The start of 2017 has seen steam come out of some of the Trump reflation trades - long dollar and short Treasuries in particular. But once investors accept that the new administration wont be able to work as many economic miracles as once hoped, therell be much more repricing required to get back to where we were before the election.
The yield level of 2.3% is the key pivot in 10-year Treasuries. The dollar trade has already been broken, but theres more downside to come. Perhaps more interesting now is the assets that have seen little pullback yet.
I highlighted the topping price-action of commodities at the start of last week. The anticipated U.S. infrastructure plan was always going to be marginal in terms of real demand for industrial metals, but the sentiment boost was fundamental to price gains in the past three months. That support has just been removed.
U.S. equities make records weekly but the next stage is surely going to be de-risking and deleveraging, meaning a correction is likely. When it comes to financial markets trading the promises of the then-incoming U.S. administration, the end of 2016 was dominated by unrealistic hopes. This year started with glimmers of reality replacing those dreams. The next phase may be dominated by genuine disappointment upon realizing the future is at the pessimistic extreme of the potential spectrum.
REALITY LADIES AND GENTLEMAN - REALITY - I will return later today and at the moment my position of SHORT SPX500 that I put on at 10:31 AM is in a DRAW UP at $600 US less my rollover costs of $63.00. I also put on one position of SHORT US 30 at 6:36 AM and have a DRAW UP of $25.00.
My STOP IS ON AT $1005 US DOLLARS and I set my LIMIT OUT at Double my Margin on this contract that is $1100 US Dollars. My LIMIT OUT is $2200 US Dollars.
Trader: "The Next Market Phase May Be Dominated By Genuine Disappointment"
http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Feb 24, 2017 6:04 AM
By Mark Cudmore, a former FX trader who writes for Bloomberg
Mnuchins Dose of Reality Yet to Bite
Steven Mnuchins dose of reality for investors in relation to the fiscal stimulus has triggered a disinflationary theme to markets that will impact many assets classes.
Yesterday, I wrote that Trumps speech to congress on Tuesday may mark a capitulation point for reflation trades. It appears that Mnuchin has tried to pre-empt him.
Amid comments on a wide array of financially relevant topics, markets should really be focusing on his admission that the stimulus wont help the economy much this year and the confirmation that passage of tax reform is unlikely to be imminent.
He reiterated that the administration is committed to an overhaul of the tax system by August. Thats still farther away than many investors had hoped for, and even that highly aggressive timeline is unachievable according to Beacon Policy Advisors.
The start of 2017 has seen steam come out of some of the Trump reflation trades - long dollar and short Treasuries in particular. But once investors accept that the new administration wont be able to work as many economic miracles as once hoped, therell be much more repricing required to get back to where we were before the election.
The yield level of 2.3% is the key pivot in 10-year Treasuries. The dollar trade has already been broken, but theres more downside to come. Perhaps more interesting now is the assets that have seen little pullback yet.
I highlighted the topping price-action of commodities at the start of last week. The anticipated U.S. infrastructure plan was always going to be marginal in terms of real demand for industrial metals, but the sentiment boost was fundamental to price gains in the past three months. That support has just been removed.
U.S. equities make records weekly but the next stage is surely going to be de-risking and deleveraging, meaning a correction is likely. When it comes to financial markets trading the promises of the then-incoming U.S. administration, the end of 2016 was dominated by unrealistic hopes. This year started with glimmers of reality replacing those dreams. The next phase may be dominated by genuine disappointment upon realizing the future is at the pessimistic extreme of the potential spectrum.
REALITY LADIES AND GENTLEMAN - REALITY - I will return later today and at the moment my position of SHORT SPX500 that I put on at 10:31 AM is in a DRAW UP at $600 US less my rollover costs of $63.00. I also put on one position of SHORT US 30 at 6:36 AM and have a DRAW UP of $25.00.
My STOP IS ON AT $1005 US DOLLARS and I set my LIMIT OUT at Double my Margin on this contract that is $1100 US Dollars. My LIMIT OUT is $2200 US Dollars.
1
- Post #2,159
- Quote
- Feb 24, 2017 7:36am Feb 24, 2017 7:36am
- | Joined Oct 2016 | Status: Member | 518 Posts
DislikedFROM WWW.JSMINESET.COM PLEASE PRINT IT OUT AND READ IT AND SHARE IT !!! http://www.321gold.com/editorials/gr...egen020917.pdf COMMENTS FROM BENJAMINIS: I tried to copy and paste the 7 pages of the article and I am not able to, so I need to tell you that it MUST be read since the rest of the article lays out exactly how the World Financial system will collapse.Ignored
Hi Benjamin and everyone else.
Here is the 7 pages you mentioned in your post above. Will print and read over the weekend.
The only reliable gold and silver futures are shares in mining
companies
Interest rates are blowing out and the question is who goes first
January was the worst month for European government bonds in history with all the
bonds blowing out. TCW, the US asset manager that runs worlds largest actively
managed bond fund, has eliminated its exposure to Eurozone bank debt over fears these
lenders are excessively risky. Soon the interest rates will reach crucial levels led by the
US. What I mean by that is that the US Treasury 10y rates will reverse the 35-year trend
and exceed the 3% level which will cause huge bond losses. The way the US interest rates
go the rest of the world goes especially in the intertwined world we are living today.
10-year U.S. Treasuries are resting at 2.45% because the ECB and BOJ are buying $150
billion a month of their own bonds and much of that money then flows from 10 basis
points JGB's and 45 basis point Bunds into 2.45% U.S. Treasuries. A $12 trillion global
central bank balance sheet looks permanent and is growing at over $1 trillion a year,
thanks to the ECB and the BOJ. Without that financial methadone, both bond and stock
markets worldwide would sink and produce a tantrum of significant proportions. Gross
believes that without QE from the ECB and BOJ that 10-year U.S. Treasuries would rather
quickly rise to 3.5% and the U.S. economy would sink into recession. And with scarcity of
supply of long-term government bonds the illiquidity is severely constraining the
efficiency of the bond-buying program of the central banks in keeping interest rates
down.
We see situations of upward pressure on interest rates in Europe with Italian interest
rates rising from 1% in the beginning of September to 2.35% (+135%) on January 30,
2017. In Germany the pace of inflation more than doubled in December, driven by a surge
in oil (low base effect). Consumer prices rose 1.7% from a year ago, recording the biggest
jump on record according to the Federal Statistics Office in Wiesbaden. German interest
rates rose from a negative 0.20% at the end of September to a positive 0.50% on January
30. And then we of course have the Japanese situation. Japans 10-year yield surged as
traders judged the central banks recent expanded bond purchases of 450 billion yen ($4
billion) to be insufficient to cap borrowing costs as global rates continued rising and
steepening around the globe. As a result the 10Y yield on the JGBs rose as much as 4 bps
to 0.14% on February 2, 2017, the highest since January of 2016, the market was clearly
hoping for even more. Furthermore there may be a scarcity in long-dated supply,
arguably the stuff of Kuroda's nightmares. We see the same situation of scarcity of supply
everywhere and thus the failing of the central banks policies.
Italy worlds third largest bond market (2.2trn) could cause the dominos to fall
Italy is the third or fourth largest bond market in the world amounting to 2.2trn with
bank NPLs (Non-Performing Loans) of 360bn and youth unemployment of 40%. Do you
think that Italy raising 20bn and rescuing Monte Paschi with 8.8bn solves the Italian
banking crisis? Think again what do you think what interest rates rising from 0.99%
September 1, 2016 to 2.35% on January 30, 2017 are telling us. If it is risk or inflation
doesnt really matter rates have more than doubled since September and I think we will
see 4% in Italy before the end of 2017 worsening the Italian debt situation further. Next
2
to that without any stable Government, from 1945 to 1994 (49 years) Italy had 61
Governments, how much accountability do you think there really is and time to seriously
tackle structural problems. On January 25, 2017 Italy's Constitutional Court approved a
new voting system based on proportional representation that raises the chance of an
early election this summer whilst for the time being an interim cabinet has been
appointed. On top of the Italian conundrum we have the elections in The Netherlands,
March 13, France, April 23 and Germany, September 2017 that are clearly signifying a
pull to the right, with people fed up with politicians and an islamitization of Europe,
representing multiple potential exits from the EU which each can cause the break up of
the EU with all its consequences.
The tools in the toolbox are getting exhausted and there is no plan B!
It should be clear by now that it looks like all the tools in the toolbox are getting
exhausted and it feels like all these events are converging with the weakest chain (3% US
Treasury rates, Chinas Yuan, Italys banks/bond market) snapping first subsequently
followed by the lesser weak chains. This world is more interconnected than it has ever
been (all banks hold billions of national and foreign government paper and international
trade) in history and therefore the danger of a global ripple effect is more serious than
ever. France for example holds in excess of 250bn of Italian bonds. And Germany stands
out as the biggest creditor with net claims of 754.1bn. They can kiss goodbye to that
money! Less than 4 years ago, and shortly after his infamous "whatever it takes" threat to
speculators, Mario Draghi responded to a question, saying, "there is no Plan B" when it
comes to contingency plans for a Eurozone nation leaving the monetary union. So much
for that, he is basically saying bad luck if it doesnt work.
Draghi was also quoted saying that member states can exit the EU but first have to repay
their debt. Though when like Italy you have 2.2trn in Government debt and a Debt/GDP
ratio of 132%, youth unemployment of 40% and NPL 360bn+ explain to me how you are
going to repay debt being Italy or any country for that sake? And when Italy reinstates the
Lire how is this currency inheriting a huge debt load going to be well positioned to repay
the huge Euro debt? Well in one quite simple answer it will not, it will further undermine
the credibility of debt and the currencies. Conclusion ergo an exit of Italy out of the EU
will cause huge debt defaults. And I dont believe investors will massively flee into the US
dollar because an Italian exit will finally make investors aware that debt is debt and the
situation isnt better in Japan, China or the US for that sake.
All paper contracts represent counter party risk
Inflation and risk and thus interest rates are rising and will reverse the 35-year US 10y
interest rate trend and will trigger substantial losses in real estate, car loans, equity
markets and bond markets and therefore the US dollar. And investors main concern will
be to preserve their capital avoiding counter party risk investing in an asset class that is
inversely correlated to paper assets: gold and silver and the gold and silver mining
companies.
Paper obligations like futures, ETFs, bonds, shares, derivatives and their value are all
dependent on the counter-party being able and willing to meet its obligation. If counter
parties cant meet their obligations your piece of paper representing the obligation of the
3
party that has to perform doesnt have any value but the value of the piece of paper and
thus zilch, nada. And when there is overall loss of credibility in the financial system this is
exactly what happens. That is why one wants to hold tangible assets in order not to
encounter this problem. It should be emphasized that real estate although it is a tangible
asset can in fact be regarded as a derived intangible or paper asset because all or most
real estate is financed with credit. And when people cant pay their mortgage payments
anymore forced sales will have an add-on effect on the value of real estate as we have
seen in 2008/9. And even conservatively financed mortgage holders will get into
problems because their underlying real estate/equity value declines too much following
fire sales of surrounding real estate.
In general physical gold and silver (money) are not financed with debt and therefore
dont encounter this problem. Next to that the value of gold and silver is in the asset itself
not depending on the obligation or performance of another party (that is if you dont keep
your precious metals in the bank!). So no counter party risk unless confiscated of course.
Margin (fraction) fuels speculation whilst physical installs discipline
Now I turn to the gold and silver futures and gold and silver mining shares. As we know
gold futures are standardized, exchange-traded contracts in which the contract buyer
agrees to take delivery, from the seller, a specific quantity of gold (e.g. 100 troy ounces for
gold and 5,000 troy ounces for silver) at a predetermined price on a future delivery date.
And what facilitates leveraging gold and silver price movements through the futures
markets is their small margin. When trading stocks, the equity market allows participants
to trade on up to 50% margin. Therefore, one can buy or sell up to $100,000 worth of
stock for $50,000. In the world of futures contracts, the margin rate is much lower. In a
typical futures contract, the margin rate varies between 5% and 15% of the total contract
value allowing for a 20x to 6x leverage.
Margin is a deposit that a market participant has to post with the exchange-clearing
house. Think of margin as a down payment on the full value of the contract that you are
trading. Margin has two benefits for market participants; it guarantees anonymity (the
exchange is always your counterparty), and it eliminates counterparty credit risk from
the transaction. Exchanges are regulated by the CFTC and have plenty of funds on hand to
meet all obligations. Those funds come from the margin collected by market participants.
Since margin is only a small percentage of total contract value it enables a tremendous
amount of leverage and liquidity in futures markets. Hence why we see that the amount of
registered gold inventories on the Comex is only a fraction of the number of paper gold
futures contracts. Though the main reason is that as long as the US dollar doesnt devalue
in a way that investors lose their belief in the credibility of the US dollar all gold futures
contracts can be settled nominally or in US dollars. After all gold, considered both a
commodity and a currency, is used as insurance against currencies and market
fluctuations. Gold is the best collateral you can have hence why the interest rate on gold is
the lowest of all asset classes that is under normal circumstances. Gold Forward Offer
Rate, or GOFO, which is not published any longer!!!! Is the interest rate at which gold
owners are prepared to lend gold on a swap against US dollars. For example, if investors
own gold and need to borrow dollars, they can use gold as collateral and potentially pay a
much smaller rate of interest to borrow the cash than otherwise.
4
Unequivocally the Comex doesnt have enough collateral, same situation applies to
banks
Though the moment investors start losing the confidence in the US dollar f.e. because
Trump pushes it down with his remarks in order to improve the US export position gold
futures investors might have change of heart and will ask for physical delivery and dont
want settlement in a declining paper dollar. Remember because its inverse correlation
gold is the mirror image of the US dollar, the reserve currency. In that case the Comex
wont be able to meet its delivery obligation because there just wont be enough physical
gold available for settlement from the registered inventories. The ratio gold paper futures
contracts versus the number of physical ounces in registered inventories amounts to 100-
500:1. And hence the Comex will have to call in the force majeure clause, or nominal
settlement, if most investors demand physical delivery. The paper gold price will go
through the roof though what will ultimately determine the gold price is the physical gold
price because who doesnt have the physical has nothing remember paper is paper. And
what we see is that the price for the physical gold will be the only price and will be priced
at a huge premium to the paper price if that is still quoted at all. We will get a two-tiered
pricing system kind of similar what we saw in the period 1968-1971.
The difference in price between the paper or futures and the physical will be the price for
counter party risk. Anyway my point is that if investors demand physical delivery instead
of nominal settlement in US dollars that those gold paper futures wont have any value
any longer because the Comex simply doesnt have the inventories to deliver the gold
from. Before the collapse of the futures prices the Comex will first increase the margin in
order to suppress the gold and silver prices to frustrate demand though this will be just a
matter of time especially when investors finally understand that physical gold and silver
are the only spiel in town. And just reflect who is going to sell his or her gold or silver for
worthless paper, money, even if it is priced at $2,000, $3,000, and $4,000 per ounce. Gold
and silver will go bid only, when there are many buyers and virtually no sellers!! Nobody
will sell his or her physical gold and silver that has inherent or real value for paper that
relies on the credibility of the monetary institutions and the economy and wont have any
value but the value of the paper. And therefore price estimates for gold of $10,000 or
$50,000 are not realistic because when money doesnt have any value anymore one can
attach any price in worthless paper to gold though no gold holder will sell.
Futures wont have any future any more when physical delivery is demanded
In other words gold and silver futures will have no future anymore when investors only
want physical gold and silver! That brings me to shares in the mining companies that
mine for future gold and silver. The shares in the mining companies and especially the
ones that are in operation and mining for gold and silver are in my point of view the real
futures. These mining companies are mining the future gold that is in situ in the ground
that has not been moved yet from its original or natural place of deposition. A future is a
standardized exchange-traded contract whereby the buyer agrees to take delivery, from
the seller, a specific quantity of gold (e.g. 100 troy ounces) at a predetermined price on a
future delivery date. And one could see the analogy with mining companies producing
gold and silver ounces in the future, whereby the seller is the company, managed by the
management, selling the future production at the spot price on the future date it becomes
available for sale. The shareholders are basically the holders of that contract, executed by
5
the management, participating in the profits of future gold or silver production. If a
company has lets say 3moz in gold resources and the company has 100m shares
outstanding then every shareholder is owner of 3moz/100m= 0.03oz of ore in the ground
which has a gross value of 0.03 x $1,235= $37.05. And of course the mining and
processing and G&A costs will have to be deducted and the NPV should be calculated but
you get the gist. The difference is that when in possession of a 43-101 comparable report
and a feasibility study the ore is in the ground and available for mining that is different
from the Comex operated Ponzi scheme with basically no real assets in registered
inventories to account for to cover the number (100x-500x) of gold and silver paper
futures contracts outstanding.
In other words if you want the real future and invest on the future price rises for gold and
silver buy shares in gold and silver companies that in general enjoy a beta of 2 and higher
(silver companies). And buy the shares when money still has any value because when the
value of the paper or fiat currency gets obliterated shareholders in mining companies will
not sell their shares any longer. Anyway my point is dont buy the Comex futures that are
based on the fractional system (same system as used by the banks) with low margins and
NO physical back up to speak of and no accountability for failing to deliver. As mentioned
before COMEX GOLD AND SILVER FUTURES DONT HAVE ANY FUTURE! As a last
remark I want to emphasize that some countries might confiscate gold (as happened in
the USA in 1933) and silver and the mining companies or ordain that the gold and silver
produced by the mines cant be exported (like in China). When we get at that stage things
are really bad and it is everybody for themselves!
The dollar will go down; too many people are bullish on the dollar
As mentioned the US dollar, which is inversely correlated to gold, is ultimately the spill in
the performance of gold and silver. Is history set to rhyme a cycle of 360 months from
1987 based on Gann calling a weekly top in the US dollar and Peter Navarro, head of
Trumps Trade Council not yet calling China a currency manipulator indicted Germany for
the same economic crime leading to the theft of American jobs.
6
You can detect a W formation in the US dollar chart with peaks at March 2015, November
2015 and December 2016. And when the US dollar index falls below the 99 level the fall in
the dollar can accelerate. Especially also because of Trumps announcements that the US
dollar is too strong and that other countries like China and Germany are taking advantage
of the strong dollar. It basically is the classic trade war rhetoric, as used in 1987, using
threats of currency devaluations to stimulate exports and causing a major drop in the US
dollar. This could have all kinds of consequences such as higher interest rates and a much
higher gold and silver price.
Conclusion: Physical gold and silver and the shares in the gold and silver mining
companies as the only assets as last men standing with no counter party risk.
Futures dont have any future
As a result of the undermining of the fiat currencies and especially the reserve currency
the futures market must ultimately go to a 100% margin thereby exposing the inability of
the exchange contracts to function because the Comex doesnt have enough physical to
back up the paper contracts. More importantly it will void the fractional gold and silver
futures system, which will also void the fractional banking system because in the end the
monetary system is derived from gold as the ultimate anchor. When people demand
delivery of the physical gold and silver instead of nominal settlement with US dollars it
means the trust in the dollar, as a store of value is gone why otherwise choose physical
delivery.
Believe it or not but without gold there is no security. Why do you think the largest
economies have such large gold reserves? Because it is a barbaric relic? Think again!
1. United States 8,133t Percent of foreign reserves: 74.9%
2. Germany 3,381t Percent of foreign reserves: 68.9%
3. Italy 2,452t Percent of foreign reserves: 68%
4. France 2,436t Percent of foreign reserves: 62.9%
5. China 1,798t Percent of foreign reserves: 2.2%*
* We all know that the Chinese official gold reserves are more likely to be between
10,000-20,000 tonnes if not more.
Why do you think gold silver futures with their low margin requirements mirror the
fractional banking system where 10% or less is available to meet cash requirements? It is
based on the same principle that banks and the Comex dont believe that deposit holders
or gold futures investors will all ask for their deposits and physical gold at the same time.
They have a sort of blind trust and are oblivious to the fact that the system will break
when you abuse it enough. The CDS debacle with AIG in 2008 has shown us how wrong
these people can be they can think only one way. Hence why the Fed was forced to pump
$3.5trn to $4trn in the market thereby also avoiding the potential failing of the Comex
whereby investors would have stood for physical delivery of their futures contracts. The
injection of the trillions of dollars took the focus off the real benchmark of stress in the
system: gold and silver. And as such created the illusion that things are ok whilst we
know that all the stats published by the Government are purely to color the rosy picture
that is not backed up by the real economics. We have to wonder what will happen next
7
time the system gets close to default. An injection of $15-20trn? And what will that do to
the US dollar in terms of purchasing power. And what will happen to the paper and
physical gold and silver markets?
Price determination of the precious metals will become a physical metals affair where in
price determination it is up to the physical market only. What is a paper contract that
cannot perform, that cant meet its obligations of physical delivery worth? How does the
Federal Reserve take that derivative contract on to its balance sheet as was plan A for all
derivatives in 2007. It does not because if it does it basically signifies the failure of the
futures. This leaves physical gold and silver and the shares in the gold and silver mining
companies as the only assets as last men standing with no counter party risk. Futures
dont have any future
Gijsbert Groenewegen
[email protected]
8 February 2017
- Post #2,160
- Quote
- Feb 24, 2017 7:47am Feb 24, 2017 7:47am
- | Commercial Member | Joined Dec 2014 | 11,709 Posts | Online Now
http://www.zerohedge.com/news/2017-0...ops+to+zero%29
German 2Y Yield Plunges To Record -0.95%: Citi Explains Why It Will Keep Dropping
http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Feb 24, 2017 7:17 AM
In his latest note this morning, DB's Jim Reid admits that "I've no idea why Bunds are rallying so hard at the moment." That said, he does attempt to provide some reasons noting that 10y yields (-4.7bps) hit 0.228% yesterday, down from their YTD peak of 0.495% intraday on the 26th of January. 2y yields also closed another -3.0bps lower yesterday at -0.932%. They traded as ‘high’ as -0.648% back on the same day.
The most obvious explanation is of course Euro systemic risk - especially from France and perhaps Italy. However other markets (equities, equity vol, the Euro, broader credit spreads etc) aren't moving much to price in redenomination risk in Europe. A lack of high quality collateral has been cited as an explanation but it's not clear there is much new info on this over recent days to explain the move. Perhaps it's as simple as government bond investors are generally by nature ultra conservative and Bunds seemingly offer complete safety from redenomination risk.
Whatever the reason, the demand for German paper is nowhere more obvious than the "schatz", the German 2 Year whose yield fell earlier in the week to what was then a record 0.92%, and has since continued to fall, earlier in the session sliding to a new all time low of -0.95%, down 15 bps on the week, before rebounding modestly as ravenous credit traders snapped up every German asset they can find amid rising political fears, and the avocementioned concerns about a collateral shortage.
http://www.zerohedge.com/sites/defau...atz%202Y_0.jpg
While in the earlier part of the week the appetite for German paper was as a result of a sudden spike for Marine Le Pen in the presidential polls, this has since moderate and yet the flight to German safety has not faded.
Schatz prices have also been boosted by reports the ECB has been buying the paper at recent prices, after it revised its bond-buying parameters. Previously, the central bank limited its sovereign debt purchases to yields above -0.4 per cent.
But perhaps the big catalyst for today's move is a note out of Citi's harvinder Sian and Jamie Searle, who expect to see the Schatz to drop to -1%, for one main reason which has nothing to do with French politics: the ECB needs to buy around EU80b 1-6y Germany by year-end, and as a result traders are merely frontrunning the ECB. They also expect the Bund yield to plunge again, dropping as low as -0.10%.
They write that in QE simulations, based on assumptions and judgments due to the lack of QE holdings data, there is no credible alternative to front-end buying in Germany. The simulation suggests that by Dec. 2017 the available pool of Bunds will be exhausted across all sectors, and this dwindling pool of Bunds raises questions over the ability to extend QE.
Here are the highlights from their note:
Schatz made record yield lows this week at -0.91% (and Bobls at -0.56% were only Gbp off their record). That is despite strong data and ECB hawks wanting to remove rate cut possibilities from forward guidance. We think Schatz yields can go even lower, initial targeting -1%.
This week's rally has been driven by French politics and associated tail risk redenomination concerns. But, the rally owes a lot to the ECB beginning to purchase bonds below the depo rate (which started on the 16 January according to the ECB accounts). This is likely to be the lasting driver.
That is because prioritising QE purchases above the depo rate doesn't work for Germany. Just to complete the QE already announced (to Dec-17) requires a heavy dependency on the 1.6yr sector of the German curve, according to our estimates. Our simulation suggests that the monthly average maturity of purchases will fall to just above 6 years very quickly. and stay there. To put a number on it, we think the ECB will buy around €80bn 1-6yr Bunds just to complete QE to year-end.
QE should keep up the downward pressure on Schatz and Bobl yields, regardless of developments in France. It should also drive yields lower further out given the curve is already steep (we forecast a low for lOs of 0.10%). It also means euro swap spreads can continue to richen, even from here.
Another really important point falls out from our simulation of German QE to year-end. It is surprisingly challenging to extend QE beyond Dec-17 without a hard break of the capital key. That greatly reinforces our concern that this heralds the end of the ECB's lender-of-last-resort function. Huge risks lie ahead for the EMU periphery.
This week: 1) French politics and the chart that scared the market; 2) Simulating GE - why Schatz will stay rich; 3) QE extension beyond Dec-17 is harder than it seems; 4) German yields to fall, regardless of French risks.
http://www.zerohedge.com/sites/defau...Y%20citi_0.jpg
And here is Citi's simulation of QE, according to which the central bank will keep buying this most desired of German financial assets:
Simulating QE - why Schatz will stay rich
To understand the reliance of the German portion of QE (specifically the PSPP) on the 1-6yr sector, we have run a simulation to Dec-17 (announced QE).
We stress from the outset that this requires many assumptions and judgments on our part due to the lack of holdings data for ECB QE.
The starting point for our simulation is how much we think there is left to buy while respecting the 33% issue/issuer limits. As a reminder, the German portion of PSPP can be made up of sovereign bonds, agencies and regional debt. The estimates in Figure 4 are derived from our model' for QE purchases to date.
An important assumption in the model is that purchases so far have been split 85% in Bunds, 10% in agencies and 5% in regional debt. This is tilted towards Bunds -which are only 60% of the eligible pool - to reflect relative liquidity the and relatively small outstanding sizes of agencies and regional debt. As we will see, how the asset split evolves is crucial to the longevity of QE.
How much left to buy?
Figure 4 makes it clear that the bulk of Bunds available to buy are in the front-end. And this is only thanks to the ECB now allowing purchases below the depo rate. Before this parameter change, Bunds were running out on our model.
There is quite a bit of agency and regional debt available to buy (respecting 33%), but we expect that we are overestimating. On regional debt in particular we may even be doubling the real potential (as we include all listed bonds which fit the ECB criteria of which quite a sizeable portion may be registered bonds). In reality, only benchmark format laender bonds are likely to be bought and may be hard to find.
Running a QE simulation to Dec-17
The model gives us a starting point for our simulation for monthly PSPP purchases of German debt to Dec-17. We calibrate February purchases to have an average maturity of around 7.5 years given the January figure. That involves 85% allocation to Bunds, 9% to agencies and 6% to regional debt. Within Bunds, the bulk is allocated to 1-6yr. A higher allocation to 15yr+ means it would run out very quickly. The allocation to 6-15yr is largely determined by new supply (which we allow for together with bonds dropping below lyr). Further, by running this simulation it quickly becomes apparent that the 85% allocation to Bunds is hard to sustain without prematurely running out of Bunds before Dec-17. Our simulation has this dropping to 80% then 75%.
http://www.zerohedge.com/sites/defau...%20lower_0.jpg
* * *
If Citi is correct, expect a continuation of the bifurcated paradox of stocks rising even as the German "flight to safety" asset continues to show a level of near panic by market investors, leading to even more confusion.
German 2Y Yield Plunges To Record -0.95%: Citi Explains Why It Will Keep Dropping
http://www.zerohedge.com/sites/defau.../picture-5.jpg
by Tyler Durden
Feb 24, 2017 7:17 AM
In his latest note this morning, DB's Jim Reid admits that "I've no idea why Bunds are rallying so hard at the moment." That said, he does attempt to provide some reasons noting that 10y yields (-4.7bps) hit 0.228% yesterday, down from their YTD peak of 0.495% intraday on the 26th of January. 2y yields also closed another -3.0bps lower yesterday at -0.932%. They traded as ‘high’ as -0.648% back on the same day.
The most obvious explanation is of course Euro systemic risk - especially from France and perhaps Italy. However other markets (equities, equity vol, the Euro, broader credit spreads etc) aren't moving much to price in redenomination risk in Europe. A lack of high quality collateral has been cited as an explanation but it's not clear there is much new info on this over recent days to explain the move. Perhaps it's as simple as government bond investors are generally by nature ultra conservative and Bunds seemingly offer complete safety from redenomination risk.
Whatever the reason, the demand for German paper is nowhere more obvious than the "schatz", the German 2 Year whose yield fell earlier in the week to what was then a record 0.92%, and has since continued to fall, earlier in the session sliding to a new all time low of -0.95%, down 15 bps on the week, before rebounding modestly as ravenous credit traders snapped up every German asset they can find amid rising political fears, and the avocementioned concerns about a collateral shortage.
http://www.zerohedge.com/sites/defau...atz%202Y_0.jpg
While in the earlier part of the week the appetite for German paper was as a result of a sudden spike for Marine Le Pen in the presidential polls, this has since moderate and yet the flight to German safety has not faded.
Schatz prices have also been boosted by reports the ECB has been buying the paper at recent prices, after it revised its bond-buying parameters. Previously, the central bank limited its sovereign debt purchases to yields above -0.4 per cent.
But perhaps the big catalyst for today's move is a note out of Citi's harvinder Sian and Jamie Searle, who expect to see the Schatz to drop to -1%, for one main reason which has nothing to do with French politics: the ECB needs to buy around EU80b 1-6y Germany by year-end, and as a result traders are merely frontrunning the ECB. They also expect the Bund yield to plunge again, dropping as low as -0.10%.
They write that in QE simulations, based on assumptions and judgments due to the lack of QE holdings data, there is no credible alternative to front-end buying in Germany. The simulation suggests that by Dec. 2017 the available pool of Bunds will be exhausted across all sectors, and this dwindling pool of Bunds raises questions over the ability to extend QE.
Here are the highlights from their note:
Schatz made record yield lows this week at -0.91% (and Bobls at -0.56% were only Gbp off their record). That is despite strong data and ECB hawks wanting to remove rate cut possibilities from forward guidance. We think Schatz yields can go even lower, initial targeting -1%.
This week's rally has been driven by French politics and associated tail risk redenomination concerns. But, the rally owes a lot to the ECB beginning to purchase bonds below the depo rate (which started on the 16 January according to the ECB accounts). This is likely to be the lasting driver.
That is because prioritising QE purchases above the depo rate doesn't work for Germany. Just to complete the QE already announced (to Dec-17) requires a heavy dependency on the 1.6yr sector of the German curve, according to our estimates. Our simulation suggests that the monthly average maturity of purchases will fall to just above 6 years very quickly. and stay there. To put a number on it, we think the ECB will buy around €80bn 1-6yr Bunds just to complete QE to year-end.
QE should keep up the downward pressure on Schatz and Bobl yields, regardless of developments in France. It should also drive yields lower further out given the curve is already steep (we forecast a low for lOs of 0.10%). It also means euro swap spreads can continue to richen, even from here.
Another really important point falls out from our simulation of German QE to year-end. It is surprisingly challenging to extend QE beyond Dec-17 without a hard break of the capital key. That greatly reinforces our concern that this heralds the end of the ECB's lender-of-last-resort function. Huge risks lie ahead for the EMU periphery.
This week: 1) French politics and the chart that scared the market; 2) Simulating GE - why Schatz will stay rich; 3) QE extension beyond Dec-17 is harder than it seems; 4) German yields to fall, regardless of French risks.
http://www.zerohedge.com/sites/defau...Y%20citi_0.jpg
And here is Citi's simulation of QE, according to which the central bank will keep buying this most desired of German financial assets:
Simulating QE - why Schatz will stay rich
To understand the reliance of the German portion of QE (specifically the PSPP) on the 1-6yr sector, we have run a simulation to Dec-17 (announced QE).
We stress from the outset that this requires many assumptions and judgments on our part due to the lack of holdings data for ECB QE.
The starting point for our simulation is how much we think there is left to buy while respecting the 33% issue/issuer limits. As a reminder, the German portion of PSPP can be made up of sovereign bonds, agencies and regional debt. The estimates in Figure 4 are derived from our model' for QE purchases to date.
An important assumption in the model is that purchases so far have been split 85% in Bunds, 10% in agencies and 5% in regional debt. This is tilted towards Bunds -which are only 60% of the eligible pool - to reflect relative liquidity the and relatively small outstanding sizes of agencies and regional debt. As we will see, how the asset split evolves is crucial to the longevity of QE.
How much left to buy?
Figure 4 makes it clear that the bulk of Bunds available to buy are in the front-end. And this is only thanks to the ECB now allowing purchases below the depo rate. Before this parameter change, Bunds were running out on our model.
There is quite a bit of agency and regional debt available to buy (respecting 33%), but we expect that we are overestimating. On regional debt in particular we may even be doubling the real potential (as we include all listed bonds which fit the ECB criteria of which quite a sizeable portion may be registered bonds). In reality, only benchmark format laender bonds are likely to be bought and may be hard to find.
Running a QE simulation to Dec-17
The model gives us a starting point for our simulation for monthly PSPP purchases of German debt to Dec-17. We calibrate February purchases to have an average maturity of around 7.5 years given the January figure. That involves 85% allocation to Bunds, 9% to agencies and 6% to regional debt. Within Bunds, the bulk is allocated to 1-6yr. A higher allocation to 15yr+ means it would run out very quickly. The allocation to 6-15yr is largely determined by new supply (which we allow for together with bonds dropping below lyr). Further, by running this simulation it quickly becomes apparent that the 85% allocation to Bunds is hard to sustain without prematurely running out of Bunds before Dec-17. Our simulation has this dropping to 80% then 75%.
http://www.zerohedge.com/sites/defau...%20lower_0.jpg
* * *
If Citi is correct, expect a continuation of the bifurcated paradox of stocks rising even as the German "flight to safety" asset continues to show a level of near panic by market investors, leading to even more confusion.
1
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