EurAnalysis

Take your pick

Rising Wedge


Rising Triangle

when the market is ranging its form lots of patterns ha ha

Thanks for your explanation, I missed the entry at 1.34 so I'm not as optimistic as you.. I also have a short with no clear tp target at this point with a stop above 1.33,(currently underwater so.. hopefully you are right).

So today is/was the Happy New year in Bengaluru, 'Happy Tamil New Year' .. to all my South Indian brothers here! Hope you all have enjoyed the fire crackers in the E/U chart today ... Happy weekend and all the best to all !

I AM right. But something can change in a flash and then I'll be wrong. That's why a trader has to remain nimble at all times.

Have a great weekend.

Same to you Rekon. Enjoy your weekend.

Inflation – Before and After the Federal Reserve


http://staticapp.icpsc.com/icp/loadi...546c/image/png



In a lecture the other day, Federal Reserve Chairman Ben Bernanke made the mistake of talking about inflation during his critique of the gold standard, going so far as to say that when the barbarous relic was used as the foundation of our monetary system “over the medium run, it sometimes caused periods of inflation and deflation"

From WWW.JSMINESET.COM

“Swift” Kick To The US Dollar

March 23, 2012, at 8:47 pm
by Jim Sinclair in the category General Editorial |
My Dear Extended Family,

Today two events took place, one which has the capacity to make the recent low price of gold in the $1630s the low of this reaction (disappointing housing statistics), and another to fuel the gold price into its true 2012 range of $1700 – $2111 by this summer (utilization of selective lock out of the Swift system to India and others).
For fuel into the true 2012 range of $1700 to $2111:

"If a country doesn’t prove it’s making the necessary reductions by the end of June, any institution in that nation that settles petroleum trades through Iran’s central bank will be cut off from the U.S. banking system."
This is terribly ill advised and poorly timed. It smells like a threat of selective lockout via the Swift system.

At a time when the US dollar is sundering as the major international settlement mechanism this is the last thing that dollar managers should consider. Whoever came up with this idea has no appreciation of two points – the weakness of the Western financial system and whatever weapon of war will be used in kind.

The major financial weakness in the US is the level of the US dollar due to sundering use in international contract settlement, the clear and present trend of substituting both the Yuan and Euro as international settlement currencies, and the lack of true economic buyers in the US long bond market.

History will record this decision at this time as a major factor in the final move to financial unwind in the West.

The letdown of the housing report today does not support the majority view that the US is gaining take off speed economically. It is not. It will not and QE will go to infinity, about that there is no question.
Regards,
Jim


Jim Sinclair’s Commentary
Here is the latest from John Williams’ www.ShadowStats.com
- Activity in Housing and Construction Remains Stagnant Near Historic Lows
"No. 425: February Housing Starts, New and Existing Home Sales"
http://www.shadowstats.com
http://www.jsmineset.com/wp-content/...02_thumb18.jpg

http://vimeo.com/34152503


Is the financial crisis over, or are we heading towards disaster? End of The Road portrays eleven influential commentators within the finance and investment communities, as they share their knowledge of our current financial structure. Through each of their narratives, a story is built which chronicles the current economic dilemma and paints a picture of the world’s financial future.

Whereas China has taken a breather with regard to piling on U.S. debt, Japan has increased its purchases of Treasuries, possibly because it is eager to weaken its own currency. Japan’s Treasury holdings now stand at $1.1 trillion. Together, total foreign holdings of U.S. Treasuries rose 0.9% to a record $5.05 trillion in January.
http://www.merkfunds.com/images/2012...s-treasury.jpg
Unfortunately, foreigners might be attracted to the U.S. dollar more for liquidity and less so for quality considerations. Central banks with billions to deploy are able to do so in U.S. Treasury markets without influencing market prices too much. Think of it as the upside of issuing a huge amount of debt: there’s lots of it one can buy and sell. Liquidity, however, doesn’t guarantee success, as the Italian bond market has clearly shown; when weaker Eurozone countries are engulfed in a crisis of confidence, Italian bonds have often been sold as a proxy due to the size and depth of the market. Japan represents another large bond market. Still, the U.S. bond market dwarfs all of these. When it comes to perceived safe havens, Swiss government bonds may be hard to come by at times; given the erratic actions of the Swiss National Bank in recent months and years, we have to caution that even Switzerland may not be the safe haven some perceive it to be. Moving to Germany – considered to be a large, mature market by many – note that even German Treasury bills have been extremely difficult to obtain during stretches of the financial crisis, even at negative yields.

Indeed, one of the most positive global developments would be if emerging market countries develop their domestic fixed income markets. If governments, particularly in Asia, were to issue more debt in their domestic currencies, they would be less dependent on U.S. dollar funding, reducing the so-called contagion risk in a financial crisis. Ideally, emerging markets would further develop both long-term bond markets, as well as short-term Treasury markets. The following example illustrates how global markets are so interrelated, and why such a development is so important: currently, a great deal of emerging market financing is U.S. dollar denominated, but originates from European banks. Those European banks, with trouble at home, are cutting their credit lines, to both shrink their loan portfolios, but also as their cost of borrowing U.S. dollars soared.

That’s because European banks historically obtain much of their U.S. dollar financing through U.S. money market funds. On average, U.S. prime money market funds held about 50% of their assets in U.S. dollar denominated commercial paper issued by European banks. After lots of public scrutiny, including from us (see: Making the U.S. Dollar Safer: Return OF Your Money), those holdings fell to about 1/3rd of money market fund assets in late 2011. As U.S. money market funds reduced their appetite for debt issued by European banks, the Federal Reserve (Fed), in conjunction with other major central banks, put in place “central bank liquidity swaps”, a fancy way of describing U.S. dollar loans extended by the Fed to the European banking system via the European Central Bank (ECB) to alleviate U.S. dollar financing concerns and ultimately, contagion risks to the global economy.

A key attribute of liquidity is the ability to take money out of a country. An investor will be more willing to invest in a country when there are no capital controls, when there’s confidence in the rule of law, confidence that investors’ rights are protected. And while emerging markets are generally on the right path, it’s a path that takes a long time to build, as investors’ trust must be earned over many years.

As such, odds are the reserve currency status of the U.S. is likely to erode over time rather than overnight, if for no other reason than the lack of suitable alternatives. In our view, however, U.S. policy makers would be well served if they attempted to make the U.S. dollar as attractive as possible, rather than relying on the fact that foreigners have limited alternatives. As recent years have shown, the Chinese, for example, have gained operational experience in deploying their reserves into assets outside of U.S. Treasuries, in real assets, throughout the world: notably by investing in natural resources in Australia, Africa, Latin America and Canada.

For many years, until a month ago, the ECB, in its monthly communiqué, warned of a “potential for a disorderly correction of global imbalances.” That was central bank parlance for a dollar crash. For what it’s worth, the warning was missing for the first time in years in this month’s statement.1 Like the boy who cried wolf, when someone warns about something repeatedly, few may take that risk seriously anymore. Is it complacency when one drops the warning?

What many don’t realize is that we don’t need a low probability / high-risk event – a “black swan” event – to be concerned. Take the recent turmoil in the Treasury market: from the high on February 28, 2012 until the close on March 15, 2012, the U.S. 30 year bond had fallen about 8.5% in value (with declines continuing as of this writing). Many have previously been chasing yields: a lot of money had moved into longer dated securities, the so-called long end of the yield curve. In that process, volatility in that market had come down, providing the illusion of safety. We don’t need a crash, we need a return to a more normal environment to have what may be a rude awakening for investors. The plunge in the 30-year bond in just over 2 weeks should serve as a wake-up call. It turns out that foreigners appear to have piled into longer-dated Treasuries just before the recent correction (net long-term TIC flows of $101 billion in January vs. $38.5 billion expected), possibly making for a few very unhappy, but very important investors.

What is the relevance for the dollar? Foreign investors tend to own a large amount of Treasuries. When Treasuries fall in value, their investments may go down, unless the dollar increases by the same amount. While some pundits – in an effort to comment on short-term currency moves on any one day - point out that falling bond prices make the dollar more attractive as yields are higher, that’s little consolidation to those already holding Treasuries. Indeed, historically speaking, our analysis indicates that the U.S. dollar tends to weaken during early and mid phases of an increasing interest rate cycle. That’s precisely because the bond market turns into a bear market in such an environment. It’s in the late phases of a tightening cycle that foreigners come back to the bond market, in anticipation that the next bull market for bonds is around the corner; in that phase, the dollar may get a reprieve.

However, when rates are rising, investors may want to consider reducing their interest risk, moving from longer dated bond funds to shorter dated ones. Looking at it from an international perspective, the same relationship applies; it should not be a surprise that the volatility in shorter dated fixed income securities is less than that of longer dated ones:

http://www.merkfunds.com/merk-perspe...03-20-insights


http://www.merkfunds.com/images/2012...dollar-rug.jpg

http://www.johnmauldin.com/images/up.../mwo032312.pdf

Next week zones that I keep eye on:

Hi PT, I am reading a book "WHAT HAS GOVERNMENT DONE TO OUR MONEY?" by MURRAY N. ROTHBARD, can you please explain the bold phrase about Gold. Thanks.

Because gold is a general medium, it is most marketable, it can be stored to serve as a medium in the future as well as the present, and all prices are expressed in its terms.

Gold mining is, of course, no more profitable than any other business; in the long-run, its rate of return will be equal to the net rate of return in any other industry.

The key words here are "Gold Mining". Gold mining is the activity of gold mining companies, and not the actual bullion. So when they say it is no more profitable in the long term than any other business, they are not saying that owning the actual gold bullion is no more profitable. They are two different things.

Gold bullion appreciates in value over time at a higher rate of return than stocks in a gold mining company. That is what I believe is the gist of the statement.

The lavender supply zone is also the 61.8 fibo retrace of the big move down and has held well. One two weeks ago and twice this week, although yesterday pierced it a bit but was quickly rejected (defended by those with interest in the no-touch barrier option at 1.33)

The blue supply zone above it is the 78.6% fibo area but to reach there, the market would have to completely burn through the barrier option. Although possible, it is unlikely to do it with ease. I guess it will all depend on market sentiment next week. If it does manage to get here, I think this supply zone will get chewed fairly quickly and we will see 1.3485 again in no time.

Should be interesting

Thanks PT! Idea is clear now

This closest supply right now has been chewed many times already so yes we can't take it very seriously anymore and this next blue supply is a structurally a bit ugly so it's possible it won't be a big nut for the bulls. S 1.346 is the only very serious one.

Leading Japanese economist cites killing of Glass-Steagall as main cause of blowout. Daisuke Kotegawa, former top Japanese Ministry of Finance official and Japanese representative to the IMF, named the takedown of Glass-Steagall as the “main structural cause of the financial bubble in the United States and Europe from 2002 to 2007.”

Writing for the Canon Institute for Global Studies, where he is now the Research Director, Kotegawa also nailed the blundering response by the Paulson/Geithner/Darling team in London and New York to the 2008 financial collapse as severely aggravating the global crisis. He compared this to the way he had handled a similar crisis in Japan in 1999 (he was director of the securities division at the Ministry of Finance at the time), forcing the unwinding of the failed firms’ foreign transactions first, then allowing Japan to absorb the cost of the liquidation, rather than forcing the rest of the world to pay for their crisis—but also throwing several bankers in jail, noting that his repeated advice to the U.S. and London to jail the criminal bankers has been ignored.

Should be ending soon,hmmm...

Bro,Love your background chart colour,what colour is it ?