Money Flow Trading Method along with Risk Management

Shabbot Shalom(Mr. Benjaminis), whenever I ask you any question, you reply RUDELY & irrelevant. Every time you ask people to open a DEMO
Account with $50,000 but your balance was showing way below that., that’s why I asked., but see how you reacted!!!!! That’s why all your best
Students left. At this age you must have patience. And I NEVER disrespect you.

Hello again Benjaminis,
Its amazing how simple and effective your trading plan is. I got to admit at a certain point I thought that things where going to crash and burn. I was wrong, and the markets always turned to favor you. It has been hard to trade these past weeks but you pulled it off, now I understand why you say you must trade with no fear and be a master of your emotions. I would like to learn more, when can we scheduled a video conference? I am so impressed with what you where able to do with my demo account.
Best regards

Good morning Forex Traders

I have now closed ALL except three of my positionsas you can see in this SCREENSHOT.

I have done 72 Forex trades since I posted the first SCREENSHOT and I have brought the balance to $54,040.16 US Dollars.

I had one losing trade in the 72 that I did and that was because of carrying costs.

The trading started on February 6, 2020 WHICH WAS 20 DAYS AGO.


$27,949.09 WAS WHERE I STARTED THAT STRING OF FOREX TRADING FROM AND NOW THE BALANCE IS $54,040.16 US Dollars.

That is an increase of $26,091.07 US Dollars.

That is what I have done.

I can teach you to make at least 5% (ROI) Return on Investment monthly if you have the skills necessary.


Look at the Finviz 5 Minute chart and you can see that I entered my positions at the start of the reversal when the markets came on board in Frankfort at 2:00 AM.

https://finviz.com/futures_charts.ashx?t=YM&p=m5

Good morning

I will get right to the point. My credentials are not in question. If they are to you then you have no need for my services.

As of March 1, 2020, anyone that wants to sign up for my 90 day training program needs to send me an email to [email protected] and give me all the KYC information.

Once I speak to you on the telephone and we both agree to work together my fees are $500.00 Canadian Dollars for a 90 day hands on evaluation.

That will get you 24/7 full time access to my services. Until everything is moved to my corporate website the teaching and evaluation will be done on this thread that I started on December 3, 2016 for BETA testing purposes.

Aviel Forex Learning Edge Corporation

Good morning

It is that simple when you are a professional Forex trader as myself. Of course I invested 18 years of my life to arrive at this point in time.

My last two Forex trades were closed in minutes !!! EASY PROFITS !!!

http://www.whatdoesitmean.com/index3142.htm

February 29, 2020

Atomic Bomb Threat Between US-Russia At Greatest Since 1983 As Pentagon Prepares For Rebellion And Space War

By: Sorcha Faal, and as reported to her Western Subscribers

An ominously worded new Ministry of Defense (MoD) report circulating in the Kremlin today noting the Northern Fleet being ordered to continue its testing of nuclear warhead capable hypersonic missiles, states that the alarm being expressed by President Putin and other Members of the Security Council (SC) over the rapidly unfolding crisis in Syria necessitated this action after Turkey invoked Article 5 of the NATO Treaty asking other members of this Western military alliance to come to its immediate aid—an action which now brings the threat of a nuclear war between the US and Russia to its greatest level since 1983—and sees Foreign Minister Sergey Lavrov warning the West “the situation in Syria does not give NATO cause for joint retaliation in accordance with the alliance’s own fundamental documents”—a warning quickly replied to by top US defense expert Scott Ritter, who said: “even NATO is unwilling to touch Turkey’s Syrian mess with a ten-foot pole”—an assessment seemingly supported by facts and evidence, as instead of the US military preparing to engage in a nuclear war with Russia, it appears to be otherwise occupied with other concerns—such as the grim situation across its northern border in Canada where ANTIFA terrorists have crippled that nation’s rail system, to include their blocking another major rail line this week, as well as one of their suspected terrorist members having attempted to blow up a car in the Pentagon parking lot this past Monday—an attempted ANTIFA terrorist attack immediately responded to by the US Army warning the citizens of North Carolina to be aware that elite Special Forces are spreading themselves out throughout this State, and these peoples will be hearing explosions and seeing soldiers acting as ”guerrilla freedom fighters” between 6-19 March—and with fast-spreading stories circling the globe that the coronavirus COVID-19 disease is linked to feared Chinese 5G technology, the Pentagon has, also, ordered the US Air Force to immediately team up with SpaceX for a “massive” live fire exercise set to begin on 8 April that will see SpaceX Starlink satellites linked up with multiple armed forces systems—the same SpaceX Starlink satellites that are now being reported have been put into place to defeat Chinese 5G technology. [Note: Some words and/or phrases appearing in quotes in this report are English language approximations of Russian words/phrases having no exact counterpart.]

http://www.whatdoesitmean.com/zip22.jpg

According to this report, this present crisis has provoked a European nightmare as Turkey “opens the gates” on Syrian refugees while the coronavirus COVID-19 disease ravages nearby in Iran—that at this hour sees thousands of these refugees preparing to stream into Greece from Turkey—and in response to, now sees Greece sending 50 of its warships to guard their borders against them.


Not just does Greece have to protect its borders against possible coronavirus infected refugees either, this report notes, as just hours ago, the United States had to shut its border to stop illegal migrants rushing across from Mexico—a Mexico that yesterday confirmed the coronavirus was in their nation—and after Mexico confirmed the presence of this disease, it then beyond shockingly saw a band of leftist US Federal Judges ordering these possibly infected illegal migrants be allowed to immediately enter the United States—all of whom, though, were forced to reverse this insane order a few hours later.

http://www.whatdoesitmean.com/zip23.jpg

Mexico confirms presence of coronavirus COVID-19 in their country (above) on 28 February 2020.

Most despicably occurring in the United States as the world teeters on the brink of nuclear war, this continues, is its leftist mainstream propaganda news media using the coronavirus as bludgeon to hammer President Trump over the head with—an ill deserved bludgeoning joined by demented leftist Hollywood elites calling on all Americans to shut down their nation’s economy this coming Monday to cause a $238.2 billion dollar blip on the federal government’s records in order to oust Trump from power—is a call for economic terrorism being gleefully celebrated by radical leftist New York Times financial columnist Paul Krugman—all responded to by top Trump loyalist, and America’s most listened to radio host Rush Limbaugh, who ripped into these leftists saying “You Ought To Damn Well Be Ashamed”—a well deserved thrashing of these lunatic leftists who’ve so terrified their citizens that a new survey has stunningly found that 38% of Americans won’t buy Corona Beer “under any circumstances” because of the coronavirus outbreak—the exact same coronavirus the world renowned New England Medical Journal has just declared “is no worse than the flu”.

http://www.whatdoesitmean.com/zip24.jpg

At the same time the American people are being inundated with leftist media-hyped coronavirus hysteria, this report details, they are, also, being confronted by what is now being called the Corona-Crash that sparked this week’s “fastest correction in history” on their stock markets seeing record-breaking volume—a “correction”, however, that has nothing whatsoever to do with the coronavirus, as what has actually occurred is a “deflationary action” taken by the United States Federal Reserve—the central bank of the US whose monetary polices have flooded “free money” into these stock markets inflating them to record highs beyond the earning capacities of the companies whose shares are bought and sold—and who is using the coronavirus hysteria to deflate these markets in order to bring them back to normal—that’s leading experts to ponder if the Federal Reserve has finally “got religion” and is going to let these inflated stocks collapse without intervening—but whose “Game of Chicken” they’re playing means either the Federal Reserve begins to intervene or oil goes to sub-$30 per barrel and the world enters a deflationary implosion, the very thing they’ve been trying to stop from happening since 2008—and which everyone of sound mind in the world knows the Federal Reserve will keep doing—thus meaning that the only long-term consequence of this coronavirus hysteria will be the returning to normalization of the world’s shipping container fleets, that could take several weeks, or a couple of months—and most critically to be noticed, is that even though US markets took a dive this week with their worst four days in DOW history, these markets remain up more than 40% since President Trump was elected in 2016.

http://www.whatdoesitmean.com/zip21.jpg

US stock market chart from 29 May 1896 to 27 February 2020 (above) shows the true insignificance of this week’s Corona Crash.

As to how President Trump is himself dealing with this latest leftist media-driven hysteria attack against him and the peoples of America, this report concludes, all signs point to his handling things like he always has, by “Winning, Winning, Winning”—one of whose most important victories this week proved his master plan logic to bring companies and jobs back to the US so things like the coronavirus won’t harm their nation’s economy—sees one of his top socialist Democrat Party presidential contenders Bernie Sanders being shredded by experts for using “Magic Math” to “Pay With Unicorn Dust” all of the “free” things he’s promised to give the entire world once he’s elected and can let them all into America—sees him no doubt watching in laughter as top Republican Party billionaire hedge fund investor Paul Singer moves to oust from power the radical leftist CEO of Twitter Jack Dorsey—saw him sitting in smiles this week at the White House when Professor Jack Brewer from the Gabelli School of Business at Fordham University rose from a crowd of hundreds of his fellow black American leaders and proclaimed to cheers: “Mr. President, I don’t mean to interrupt, but I’ve got to say this because it’s Black History Month: Man, you the first black president”—all followed a few hours ago when the main US Federal Appeals Court in Washington handed Trump a soaring victory by their ruling that the White House didn’t have to honor subpoenas from the US Congress, and said US Federal Courts had no right to interfere in battles between the Executive and Legislative branches of government—and in the past hour, saw Trump’s Secretary of State Mike Pompeo signing the historic peace agreement with the Taliban to end America’s longest war in Afghanistan.

http://www.whatdoesitmean.com/zip25.jpg

February 29, 2020 EU and US all rights reserved. Permission to use this report in its entirety is granted under the condition it is linked to its original source at WhatDoesItMean.Com. Freebase content licensed under CC-BY and GFDL.

[Note: Many governments and their intelligence services actively campaign against the information found in these reports so as not to alarm their citizens about the many catastrophic Earth changes and events to come, a stance that the Sisters of Sorcha Faal strongly disagree with in believing that it is every human being’s right to know the truth. Due to our mission’s conflicts with that of those governments, the responses of their ‘agents’ has been a longstanding misinformation/misdirection campaign designed to discredit us, and others like us, that is exampled in numerous places, including HERE.]

[Note: The WhatDoesItMean.com website was created for and donated to the Sisters of Sorcha Faal in 2003 by a small group of American computer experts led by the late global technology guru Wayne Green(1922-2013) to counter the propaganda being used by the West to promote their illegal 2003 invasion of Iraq.]
[Note: The word Kremlin (fortress inside a city) as used in this report refers to Russian citadels, including in Moscow, having cathedrals wherein female Schema monks (Orthodox nuns) reside, many of whom are devoted to the mission of the Sisters of Sorcha Faal.]

You WERE Warned About The Coronavirus “Telephone Disease”—But Lies Won Out Over Truth

They Died For The Crime Of What They Knew—Where Is Your Name On The Death List?

“KatyDid” Ends Democrat Reign Of Terror As Impeachment Enters “Game Over” Phase

Return To Main Page

Jim

Friday Musings…
This week a number forces combined to give pause to economic outlook as it relates to value and opportunity, and desirability.

Over $ 5 trillion was wiped out in stock market declines missing no one’s portfolio, or holdings. And COVID-19 continued its’ global march affecting countries like Iran and Italy with many reported cases causing much angst; while China struggles with its’ impact, effectively offline as the world’s workshop. Causing many companies to issue warnings about supply chain disruptions and profit warnings. What also became clear this week is that global credit expansion is actually declining. While at the same time global output is in decline as evidenced in reports of continued lackluster car sales and declines in everything from oil consumption to meat to soybeans. This is reflected in the lower prices that have declined all week. We have also seen meaningful action taken by the “bug out crowd” who hope to escape the passing storm.


One thinks that this has all makings of a rogue wave. It is well canvassed that the world was short on liquidity last year. The fall in China output will place them in negative growth for a period, not yet known. However, with car sales down some 90% and many businesses running short of capital liquidity the outcome is clear. China will need to bailout not just many of their banks but whole industry segments. The question is with what capital? Printing money to prop industry in a world not consuming is a recipe for failure. Many loans China has made globally will fall short on payment. And the human impact on China is not really known and it will take several more weeks before a truthful picture emerges. And there are many theories out there as to the hastened impact of 5G on the virus spread. The truth will come out on this theory over time. What is clear is 5G from Huawei will be banned in the US shortly.


When you couple this with global angst over the virus, people become worried and tend to tighten their spending behavior and already it is quite clear that typical social norms are changing. Just go to any Chinatown anywhere to find a lack of people. Spending will be redirected, perhaps to paying down debt as optimism declines. Now add to this supply chain disruptions which will manifest in lowered employment, another decline in spending is introduced. People not working or sick do not spend.


This the lack of liquidity combines with lessened demand and credit creation, human angst over the virus, and lower asset values to create a situation whereby confidence is lacking not just in consumers but in bank lending who see their own woes of liquidity to corporations who question their businesses and in some cases their survival through difficult times as declining sales, regardless of why, lower both values and expectations.


This combined rogue wave of a lack of confidence has come together this week to affect everything and everyone. We should expect and will experience more volatility in the coming weeks as the combined impact takes hold. And phrases like “no bid” will become more common as what we will see in days ahead will make 2008 feel like a walk in the park.

Buckle up!

Cheers

Robert

Good Afternoon Forex Traders

I have decided because of the start of the FINANCIAL MELTDOWN last week and because FXCM UK has changed their US Dollars given for Demo Account purposes to $20,000 US Dollars that I will give six Forex Traders that enrols and posts here daily and is really serious about trying to become a winning Forex trader that I am willing to consider to supply $20,000 REAL FUNDS US Dollars to be managed at FXCM UK under Limited Power of Trading Authority.

There of course are conditions. They are as follows:

(1) You must post here everyday and SEND me via email to [email protected] your personal information so that I know who you are. I need to know your name and Country and your email address and telephone number and your date of birth. We would need to talk on the telephone so that I can know my client and qualify you for this rare UNIQUE ONCE IN A LIFETIME OPPORTUNITY.

(2) YOU NEED TO TAKE MY COURSE FOR A PERIOD OF 90 DAYS AND FOLLOW ALL MY INSTRUCTIONS AS YOU DEMO TRADE.

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(4) You need to open an FXCM UK trading account and register it from Turks & Caicos. That gives you 100% leverage on your FXCM UK demo Forex trading funds. You need to email me your user number and user password that is generated by FXCM UK.

(5) You need to register to post on Forex Factory in order that we can communicate daily here on this website.

Please post any questions that you may have here on my thread. Thank You.

Aviel Forex Learning Edge Corporation

https://www.zerohedge.com/markets/wh...ops+to+zero%29


Authored by Alasdair Macleod via GoldMoney.com,


Falling equity markets this week are likely to signal the onset of a bear market, responding to a combination of the coronavirus spreading beyond China and persistent indications of a developing recession.

This has provoked a flight into US Treasuries, with the ten-year yield falling to an all-time low of 1.1141%. This will prove to be a mistake, given US price inflation which on independent estimates is running close to ten per cent, exposing US Treasuries as badly overpriced.

After this short-term response, much higher US Treasury yields are inevitable. Foreigners, who possess more dollars and dollar investments than the entire US GDP will almost certainly sell, driving bond yields up and the dollar down, leaving the Fed the only real buyer of US Treasuries.

This article goes through the sequence of events likely to destroy value in US financial assets and the dollar as well. And what goes for the US goes for all other fiat-currencies and their financial markets.

https://zh-prod-1cc738ca-7d3b-4a72-b...Phenomenon.jpg


Introduction

In my last article I pointed out that the cumulative effect of central bank intervention has led to bond prices that have come badly adrift from reality. Taking a more realistic estimate of the dollar’s purchasing power than that implied in goal-sought CPI numbers, plus an estimated amount for the time preference involved, ten-year US Treasuries should yield closer to 10% to maturity, not the 1.31% implied today. If a ten-year bond has a coupon such that it is currently priced at par, the price should halve.


Those who put our monetary misfortunes down to the coronavirus have missed the point. Yes, it will be fatal, both economically and unfortunately for some of us as individuals as well. It is early days in what is definitely becoming a pandemic, that is to say an epidemic that is not restricted to national boundaries. Not only China, but other nations as well are going into a state of lock-down. Hopes that things will return to normal in the second half of this year are obviously based on a belief that there is nothing else wrong in the global economy.


This is where those who actually understand money and the credit cycle part from the economic establishment, which continuously demonstrates its cluelessness. Note these indisputable facts:

1. Economic destabilisation arises from a cycle of bank credit expansion always followed by a credit crisis. It does not arise from business, but from time to time the willingness of banks to expand credit out of thin air, creating a temporary period of economic optimism which does not last.

2. The expansion of the global money quantity since 2008 has been unprecedented, not only numerically, but in proportion to the size of underlying economies. If nothing else, logic suggests the bust that follows will be proportionately destructive.
3. While their relative magnitudes to each other were different ninety years ago, a combination of trade tariffs and the top of the credit cycle mirrors the conditions that led to the Wall Street crash between 1929 and 1932. That should be warning enough that even without a coronavirus pandemic the world is on the edge of not just a recession, but a vicious slump.

The most important difference between the Wall Street crash and the depression that followed is found in the money. In those days, both the US and UK currencies were on a gold standard, which meant that collapsing commodity prices through the dollar and sterling were effectively being measured against gold.

Other factors, such as the rapid mechanization of farming and the productivity that followed exacerbated the situation for farmers worldwide, until the UK abandoned gold in 1932 and the dollar was devalued the in 1934. In short, the link with gold meant that leading currencies were not undermined by the depression.

Nevertheless, economists in the 1930s blamed the depression on gold, and governments have sought to remove it from the monetary system. Since 1971 there has been no residual link between gold and the dollar and therefore all other state-issued currencies. The quantity of money in circulation has been free to be expanded by central banks, the only limit being the consequential limitation of price inflation. That has now been conquered by statistical method.

From their actions following the Lehman crisis it is clear central banks now feel no constraint on the expansion of the money quantity as a policy tool. The Fed, the ECB and the Bank of Japan are already expanding base money before the crisis stage of the credit cycle has materialized, which should alert us to the catastrophic failure of monetary policy. Keynes’s concept of reviving animal spirits with a kick-start of inflation has morphed into a continual and accelerating monetary inflation over the whole cycle.


Collectively, in the post-war years we all bought into monetary inflation by shifting investment allocation progressively from bonds into equities to protect long term savings. But since the interest rate spike in the early 1980s, bond yields have generally declined to the point where in dollars, euros and yen they yield less than their values of time preference. In the two latter cases investors are now even paying for the privilege of lending money to their governments.


The abolition of meaningful yields has been achieved through a combination of statistical suppression of price inflation and monetary expansion. But this is just the start of it. Imagine for a moment a collapse today akin to the 1929-32 Wall Street crash, followed by an economic slump on a 1930s scale. Freed from apparent restrictions on the expansion of money and having a mandate to do whatever it takes, combined with demands for the financing of soaring government budget deficits the expansion of money will go into hyperdrive – everywhere at the same time.


Not only do we have that problem, but we now have a viral pandemic that has all but shut down the largest manufacturing economy in the world, disrupting the overwhelming majority of supply chains elsewhere. And that assumes the coronavirus is contained to China and that early signs of it turning into a global pandemic turn out to be false. But the signs are that it is becoming a pandemic on the eve of Wall Street crash Mark II, bringing forward and amplifying the economic destruction that always follows a period of credit expansion. The effect of the virus threatens to turn an economic slump, perhaps a once in a century event, into an outright production and consumption collapse.


What lies before us will be radically different from the past. Understanding money and the effects of changes in it as a circulating medium have rarely been more important. This article outlines the effects of what lies ahead, likely to commence in a collapse of financial asset values and the purchasing power of currencies.


The Fed will lose control

The Fed’s monetary policy has been all about exercising control over markets, ostensibly targeting a rate of price inflation at 2% and maximum employment consistent with it. This power is continually abused in the name of neo-Keynesian economics, and monetary debasement has become a permanent feature of US Government financing since 2001. Consequently, US Government debt is now larger than GDP and financing it at heavily suppressed rates absorbs almost 40% of a trillion-dollar deficit.


The policy controllers at the Fed can least afford an out of control financial system to reflect realistic bond prices. With the Bureau of Labour Statistics having successfully tamed the inflation numbers, the Fed has managed to keep the lie alive about monetary inflation not being reflected in a declining purchasing power for the dollar and therefore higher bond yields. The Fed is not alone in this, but in a dollar reserve monetary system other central banks and their currencies are just bit players and a critique of US monetary and economic policies is sufficient for an understanding of what lies ahead.

The crucial question is over the likelihood that having distorted markets to the point where government debt is now substantially overpriced, can the authorities maintain the illusion?

So far, there have been two classes of economic actors which have supported this overvaluation.
The first is foreign investors, in the main building an accumulation of dollars and dollar investments through the US trade deficit. As the US economy grew along with the government’s unfunded spending, foreign owned securities, short term paper (less than one year) and correspondent bank balances amassed to the tune of about $24.8 trillion, which is more than the US’s nominal GDP. Furthermore, since the date of the last annual TIC survey, the value of foreign-owned securities will have increased even more due to higher portfolio valuations.


We can see two reasons for these flows to reverse.
The first is the global economic slowdown, particularly in international trade. A deteriorating trade outlook reduces the required cushion of holding dollar liquidity, encouraging traders to stop accumulating them, or even to see them winding them down to support ailing cash flows in their businesses back home. Foreign governments are also increasingly questioning the dollar’s reserve role in a world that has radically changed over the last forty years, encouraging Asian central banks to reduce the dollar component in their reserves.


The absence of foreign investors, who in the past have absorbed almost all of the increase of new US Treasury debt as a counterpart of the trade deficit, will be a considerable headache for the Fed at a time of rising US Government funding requirements.


The second class of economic actor is hedge funds, which through the fx swap market profit from the yield differential between US Treasury bills, or coupon-bearing bonds, and negative interest rates in euros and yen. Since the dollar’s trade-weighted index began to strengthen shortly after President Trump took office, these positions have increased as hedge fund managers saw this as a slam-dunk trade. But its profitability depends on a stable or rising dollar, and any sign of that being reversed will to lead to a substantial unwinding of positions to the detriment of the dollar.


Demand for liquidity to provide fx swaps for the hedge funds is one of the two reasons the Fed has been forced to aggressively enter the repo market, the other being the increasing amounts of Treasury bills and bonds accumulating as inventory at the prime brokers. While foreign demand for dollars has cooled, which was formally supplied directly or indirectly by bank credit expansion, the liquidity pressures in the New York money markets have increased in the absence of this source of liquidity, threatening the Fed’s control over interest rates, as the spike in the repo rate to 10% last September illustrated.


Clearly, without the Fed injecting tens of billions of dollars into the repo market interest rates would be far higher than the Fed Funds Rate, currently pegged at 1.5-1.75%. But this can only be a temporary fix, lasting so long as the dollar maintains its value in the foreign exchanges. And if the dollar begins to slide, whether foreigners or the hedge funds are responsible is immaterial. It will mark the start of a reassessment of US monetary policies by the markets becoming acutely aware that they have failed, and the Fed is boxed in.


For a time, the Fed can pretend that the economic slump and/or the coronavirus justifies an acceleration of money-printing, most likely through quantitative easing.

They will cite the demand-driven outlook for core inflation and unemployment. But when the vote from the foreign exchanges is a no-no, that will only wear for so long. Markets will eventually realize that the only buyer for increasing quantities of Treasury debt at these yields is the Fed itself through the mechanism of QE. It will be foreigners who will likely be first to abandon the Fed’s managed market environment, and a dollar crisis will ensue. And with a dollar crisis there will also be a crisis in the US bond market.


Portfolio effects

So far, markets have just begun to wake up to the likelihood of a slump induced by the coronavirus. A thousand-point decline in the Dow last Monday was probably the break point in the concept of low bond yields being good for equities on a relative return basis. Suddenly, equities are being associated with risk, raising the ghost of October 1929 when markets began the first phase of the Wall Street crash.


Today’s children of inflation-ism that pass for investment managers have responded in the only way they know by reallocating portfolio exposure in favour of perceived safety by buying US Treasuries, driving the 10-year bond yield down to 1.31%, significantly less than the 13-week T-bill rate of 1.48%. Initially, this appeared to be partly at the expense of investment allocations in favour of foreign investments, strengthening the dollar in recent days.


Given that an economic slump with or without a spreading coronavirus will lead to a rapidly increasing government budget deficit that can only be funded by inflationary means, the collapse in bond yields will likely be short-lived. If the dollar begins to be sold in the foreign exchanges a reassessment will take place. Then the pace of liquidation of dollar-denominated securities by foreign owned portfolios is bound to increase, bearing in mind that they totalled $19.4 trillion, plus $5.3 trillion in liquid short-term securities and correspondent banking deposits at the last count. Hedge funds will also be reducing their fx swaps, adding further pressure on both the dollar and US Treasury bond prices.


Selling pressure on the dollar is likely to be measured in several trillions. Having suppressed the evidence of the fall in the dollar’s purchasing power in the internal economy, domestic investors imagine the Fed can continue to hold the Fed Funds Rate at close to the zero bound while they more or less single
highhandedly fund the government’s deficit. What will make this impossible is a fall in the dollar’s exchange rate driven by foreign selling, even measured against fiat currencies with interest rates below zero. Commodity prices will begin to rise reflecting dollar weakness, despite falling real demand. And dollar hedges, such as gold, silver and even bitcoin will rise even more strongly. The risk hedge for US citizens will not be US Treasury stock, but precious metals and imported commodities.


When the Fed loses control there will be substantial losses for those currently seeking the safety of US Treasury bonds. It will be a double hit, not only through rising bond yields, but through a falling dollar making it vital for any foreign entity to liquidate portfolio and dollar positions while it can.


https://zh-prod-1cc738ca-7d3b-4a72-b...%20%286%29.jpg


Beware of the bear

It is common practice to regard portfolio investment as entirely separate from day-to-day spending. The distinction is false in the sense that financial investments only exist because the attraction of prospective returns make it worthwhile for consumers to divert some of their income from current consumption. This is important, because rising prices for financial assets requires sustained money inflows. If people on balance stop investing prices fall.


This fact undermines the assumption that in a bear market a portfolio with a valuation of a million can simply rearrange that million into different investments to preserve value. In a bear market, a significant portion of it simply disappears without any transactions taking place. Bond and stock prices fall across the board, leaving an investor wondering what to do with the balance.


Having been occasionally brutal, recent equity bear markets have been little more than indigestion in a continual inflation-fuelled bull market. The bear now due promises to be different. Hanging on in hope of better days has worked favourably for investors in the past eventually, but maybe not this time, because the scale of bond mispricing is without precedent. The Fed and other central banks believe they can handle a mild to moderate recession but have no leeway to handle anything worse. If the dynamics behind the 1929 market crash and the depression that followed are a template for today’s markets, what will evolve in the coming months will break the Fed’s control over financial markets.


In that case, fortunes will be lost. Ordinary investors who have handed investment responsibility to investment managers and financial advisors have thereby proved themselves incapable of taking an investment decision. They will lose their nest-eggs because their appointees are either perpetual bulls or simply brainless when it comes to investing.

They all talk of diversifying, which means buying a synthetic index, or investing in funds that cover so many companies as to be similar. None of them have experienced a proper bear market, where nearly every bond and equity investment collapses. The Wall Street crash wiped out 89% of the value of the Dow. That should be our guidance.


Driving it will be a bear market in US Treasuries. As fleeing foreigners sell their holdings and their dollars, the single buyer of them (the Fed) will be forced to raise interest rates. But if the Fed persists in funding the government deficit at suppressed rates, foreigners will merely accelerate their liquidation of dollars and dollar-based securities. Britain faced similar conditions in the 1970s, when the UK Treasury was always behind in its funding until it was forced to jack up gilt coupons, as far as 15¼ per cent. Sterling fell from $2.62 in March 1972 when equities peaked to $1.59 in 1976, and then fell further close to parity in 1985. And that was against a dollar that was also losing purchasing power. In the 1972-75 bear market, UK equities fell by 72% measured by the FT-30 Share Index.


In an economic slump, the ability of investors to hang on to their rapidly falling investments is compromised by rising unemployment. The flows from portfolio liquidation into the underlying economy are required to maintain body and soul. Furthermore, with the dollar’s loss of purchasing power being accelerated due to selling by foreigners, domestic living costs becomes more expensive.


Stage two for the collapsing dollar

With foreigners owning a combination of cash and securities valued at about $24.8 trillion and hedge funds short of euros and yen perhaps to the equivalent of a further four or five trillion dollars equivalent, a change in financial market conditions seems almost certain to trigger an avalanche of dollar selling. US ownership of foreign securities is less that half that at $11.3 trillion (Dec 2018), with foreign currency deposits and CDs the equivalent of $618bn. While Americans are bound to liquidate some of these foreign holdings in a slump, it will not be sufficient to offset foreign selling of the dollar.


By driving the dollar down, pressure will be put on domestic prices to rise. This will make the Fed’s position of funding government debt through QE at rates linked to a suppressed Fed Funds Rate untenable. Markets will be making their own assessment, instead of the Fed’s, when it comes to securities pricing. Given there will be a growing realization that prices will then be rising at a faster rate than the annual 10% rate currently estimated by independent analysts, government finances and their funding will demonstrably be spiralling out of control.


It will be a systemic collapse centred not on an element of the private sector as was the case with Lehman, but of the entire government apparatus. With it will be a public realization that the full faith and credit of government is the only thing that stands between the dollar’s value of the day and its value on the morrow.

Increasingly, members of the population will be likely to regard the residual values of their financial assets as a source of funding for necessities, the dollar being little more than a collapsing bridge between the two.


Those prescient enough to anticipate these events will be hedging not into US Treasuries, which in truth offer no security with government funding almost certain to spin out of control, but into gold, silver, perhaps bitcoin and related investments. They will realize it is time to give up on the Fed’s put, or any other government guarantees because they have become worthless.

http://traderfeed.blogspot.com/2020/...t-markets.html

SUNDAY, MARCH 01, 2020

The Psychology of Trading Fast Markets

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This past week has seen an explosion of market volatility, with VIX exceeding 40 and daily price ranges of several percent in major indexes. Below is a chart of the ES futures (blue line), with each data point representing 50,000 contracts traded. The red line is the 20 period volatility of those volume bars. (Data go from September 16, 2019 to the present). Volume in the market has expanded greatly. For example, on Friday we had roughly 100 bars on the chart; at the start of the year, a day was comprised of about 30 bars. But notice below that we're getting more price movement per bar currently. So the market has become extremely fast, with more volume and more movement for each amount of volume traded.

https://1.bp.blogspot.com/-GHXGUJG6z...vent022820.jpg

This can create great opportunity for short-term traders, but it can also create great problems for their trading psychology. With so many things moving, it's easy to become distracted. With so much movement, it's easy to quickly lose money. Rarely do traders properly adjust their trading sizes for the increased movement. Indeed, some may size up positions, thinking that this is a great trading environment. With more size and more movement, the volatility of PL can challenge even the most experienced traders.

In the latest Forbes article, I outline three important psychological perspectives on trading the recent market decline. One point that article makes is the importance of slowing down when markets speed up. When we face more risk and reward, there is an activation of our fight or flight responses, impelling us to react, rather than act deliberately. During those stressful occasions, blood flow actually shifts in relative terms away from the brain's frontal cortex--our executive center--and toward our brain's motor centers.

When we focus our attention and slow down, we shift blood flow in the opposite direction. Indeed, in hemoencephaolography (brain blood flow biofeedback), we actually measure that shift of blood flow via subtle changes in skin forehead temperature. We can achieve similar benefits through meditation. Even a brief break in the trading day in which we focus our attention on imagery, slow our breathing, and remain physically still can make significant changes in our patterns of arousal.

A great trading psychology technique is to just take a couple of deep breaths and perform a quick gut check before placing each trade. It introduces a moment of mindfulness in our decisions.

It is difficult to trade with FOMO if you're slowing yourself down and reflecting upon your actions.

The Forbes article highlights the likelihood that volatility will be with us for a while--and what that could mean for the market going forward. If we speed up with markets, those markets control us. Slowing ourselves down is a great way of staying in control, even in crazy market times.
Further Reading:

Mastering the Psychology of Trading Big Market Declines
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