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EurAnalysis Kindergarten 24 replies

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EurAnalysis

  • #6,101
  • Oct 28, 2011 8:46am Oct 28, 2011 8:46am
Quoting unique567
PT and group members,
Have been watching and reading your trades, thoughts and articles. Just read an article that thought you, with bearish tendencies, might find interesting.

http://www.zerohedge.com/news/citi-e...rally-has-come
I found this article sums it up very nicely, that there is no fundamental reason EUR has had any strength. The thing to me that is obvious, is that what is the incentive for these governments to really get their fiscal house in order? I think we are going to be looking at a long term EUR down trend to parity and below over the next few years as all the other shoes in the closet begin to drop.

Itally unsustainable debt and social contract structure with subpar growth prospects. Citizens not willing to change any more than the Greeks really are in accepting changes to retirement and other programs.

Spain likely to go to a more socialist government which is usually not keen on cutting social spending and lowering taxes.

Greece? Who in their right mind is going to want to lend them more money?

The only key to getting out of this is growth, and there are no drivers. ECB will be forced to start cutting rates and more QE.

It is just a matter of time and as traders how we position ourselves to take advantage.
  • #6,102
  • Oct 28, 2011 8:56am Oct 28, 2011 8:56am
Quoting PipTrapper
Hi LovePips
Sorry I didn't respond earlier as I needed sleep.
Anyway, I might have answered you by saying I expect a retrace to around the low 1.41 area but it seems now that Asia did not give it to us and I doubt very much we're going to get it today. The bulls rage on. I will post an update with my projections shortly.
Cheers
PT
Thanks PT.

The comments and discussions on this thread have been very informative - a quick thanks to Buma, Sisse, FXmindset, Pipkiller, AaronW.... and others

On the important subject of eur/usd - certainly for the next few days it appears that the bulls are going to push the euro higher (possibly to the mid 40s'). Will it last past next week?? Not 100%% sure.... the China issue seems very important. As has already been said, China has the cash, yes they are focused on returns, however they look at the long-term. An ever expanding and friendly euro could be very strategic.

The recent US-CHina relations have not been improving and I believe this could be a 'pro-euro' factor.....

From a forex perspective, none of us KNOW the answer and that's one of the reasons I love forex :-)

I actually don't care which way it goes, I just want PIPS!!
patience is a virtue
  • #6,103
  • Oct 28, 2011 8:57am Oct 28, 2011 8:57am
Could this be the beginning of a daily Head and Shoulders?

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  • #6,104
  • Oct 28, 2011 9:04am Oct 28, 2011 9:04am
Quoting foto
general conditions.
Am rethinking this part of the methodology.

Primary trend remains deflationary.

We should be seeing sustainable trends, and I would think big time sustainable trends.

But we are not getting them. What keeps disrupting the basic forces in place? Never ceasing government interventions in the economy this under the guise of preventing a market unwind.

We just had QE3 by the Fed and other CB's doing the swaps with the ECB as there was a full blown run on Europes bank deposits. These are now replaced with Fed...
Very good post analysis foto. You pretty much defined exactly whats going on in a very clear way.

Agree with your reasons. I only would have my doubts on the deflationary side. IMO loose monetary policy is already overextended and is starting to show its cost in the UK (although not in the US yet) and it will leave its mark in the US soon very soon. In that sense, ironically the EZ will be miles ahead and in a lot better position than in the printing rampage UK/US.

Well, definitively we are going to confirm a range till the end of the year (and probably 1st quarter) on this monthly close. Which make perfect sense. Euro is only pressured to the downside ecause of debt (which is "theoretically" cleared short term) and FED is guaranteeing soft dollar till 2013. If you add the interest rate differentials and the economic sluggishness in the real economy in both sides of the Atlantic ...It pretty much gives the perfect ingredients for a FA range.

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #6,105
  • Oct 28, 2011 9:26am Oct 28, 2011 9:26am
Hi Sisse,
To clarify on the deflation take, for out look.
In a debt pyramid which appears to be the current case at some point the debt becomes unsustainable ( where we are now)

As the debt becomes defaulted upon, effective money decreases.
We have a fractal banking system whereby growth of debt on bank books becomes multiplied through the economy.
Since it is not a cash based but debt created gdp, as debt is decreased gdp should likewise decrease. That results in a deflation. Less money available to buy available goods.

The CB's are printing money or creating debt by monetizing government debt obligations. Government spending in effect replaces reduced private sector spending. (good old fashioned pump priming)

This cycle is what is creating the volatile range. Government does a stimulus, the private economy supposedly is to recover and then as stability comes, the official word is that CB balance sheets get returned to normal.

We are not seeing recovery by the private economy as who wants to borrow and spend big time again.

Thus we have a policy failure. They just do not know how to deal with the true situation.
  • #6,106
  • Oct 28, 2011 9:33am Oct 28, 2011 9:33am
Quoting FXMindset
Are you Theravada Buddhism mate?
FX mindset... uh maybe...not a big fan of suffering...I am a big fan of meditation...

MLA... you would be suprised...a 10 day retreat can change somebody...but then again I can think of a few idiots...so you might be right...
Kill the ego, or it will kill the mission.
  • #6,107
  • Oct 28, 2011 9:42am Oct 28, 2011 9:42am
Quoting AaronWard
FX mindset... uh maybe...not a big fan of suffering...I am a big fan of meditation...

MLA... you would be suprised...a 10 day retreat can change somebody...but then again I can think of a few idiots...so you might be right...
So you was practised vipassana before?
If there was easy money lying around,no one would be forcing it into your
  • #6,108
  • Oct 28, 2011 10:04am Oct 28, 2011 10:04am
Well I do fully agree with your conclusion

"We are not seeing recovery by the private economy as who wants to borrow and spend big time again".
.....Thus we have a policy failure. They just do not know how to deal with the true situation."

However not with the inflationary implications.

"Since it is not a cash based but debt created gdp, as debt is decreased gdp should likewise decrease. That results in a deflation. Less money available to buy available goods"

Very true but the only debt becoming defaulted is the Greek debt and the EZ is the only CB that is not printing money (because it's mandate doesn't allow it). Therefore, it doesn't match the current US (or UK case) since QE1 and worse "the way too long" now loose monetary policy.

In simple words, I am going to even a more basic monetary case which is that all the "printed money"and low interest rates (US/UK) are being "crowed out" (not really from a strictly macroeconomic definition but I guess from your posts you have Economic/Finance background so you know what I mean) to the financial sector and not to the real economy (which is your same conclusion) but this will ALWAYS translate in inflation.

When you increase money supply but the real economy stays stuck, all the "money" will translate into inflation. My case is Stagflation.

The UK is giving early warnings of this (and is directly related to the BOE policies). Inflation 5.7%, unemployment on the highs 8.3% and GDP stagnate +0.1% and foretasted 0% next quarter....The US is a bit lagging on inflation (still flirting with the Japanese disease) but it may burst if the numbers don't change soon and FED stop fueling the process...

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #6,109
  • Oct 28, 2011 10:16am Oct 28, 2011 10:16am
Fitch has officially declared the 50% Greek haircut as a default, but will the CDS Committee declare it as such and therefore trigger the CDS?

If Greek CDS Don't Trigger, Why Would EFSF?

It appears that the 'voluntary' 50% haircut on the value of outstanding Greek debt is being structured in such a way as not to trigger CDS protection. The committee that decides is meeting to discuss whether or not the terms of its conditions for a payout have been triggered.

My colleague Matt Phillips, writing a post for the MarketBeat blog on wsj.com Thursday, didn't hold out much hope for the contracts to be triggered.

If the CDS are not triggered it will add insult to injury to those who bought protection. That's because, as an insurance contract struck between banks, the CDS usually last over certain long periods, say five years of premium payments for five years of protection. Anyone buying CDS on Greek debt earlier this year will then be on the hook for another four years of payments.
Those who say it cannot be done should not interrupt those who are doing it
  • #6,110
  • Oct 28, 2011 10:19am Oct 28, 2011 10:19am
Sissie & Foto,

There is good/bad inflation/deflation (4 types in this paradigm).

What we are seeing is (bad) deflationary cycle in the developed nations which we have masked with the printing of dollars. So things appear to be staying the same price.

In the developing world we are seeing on average 8-10% of (bad) inflation. More than 10 countries already have overnight rates of over 10 %, and there are several dozen nations with 5% or greater overnight rates.
Kill the ego, or it will kill the mission.
  • #6,111
  • Oct 28, 2011 10:20am Oct 28, 2011 10:20am
I am kinda self taught. No real higher formal education.

I understand your idea. There are times I look too far ahead.
We still have that mountain of public and private debt that will be unwound at some point down the road.

It hasn't happened yet. Just this big unstable mass with potential for default. We are getting deleveraging by consumers.
Without the means to grow out from under it all the stimulus is barely keeping it from collapse. Does not remedy it. Adding to the size of global debt just to generate a little GDP seems ineffectual.

The current status as a whole would be better described as a stagflation.

I was looking at it from components and possible future events.
  • #6,112
  • Oct 28, 2011 10:21am Oct 28, 2011 10:21am
Quoting unique567
Could this be the beginning of a daily Head and Shoulders?

Attachment
Wow. That would be a long way off to the neckline.
Possible, but the long term macros aren't pointing in that direction (yet)
Those who say it cannot be done should not interrupt those who are doing it
  • #6,113
  • Oct 28, 2011 10:23am Oct 28, 2011 10:23am
Quoting PipKiller
That's sad but I won't get into that.


Futures looking slightly risk off with money flowing into the US$, US bonds and the Yen. Looks like risk is seeking some safety for the weekend and probably a lot of proffit taking today after such a strong bull run yesterday.

Looks like it's breaking out to the downside on the 60....... or I've screwed up and I'm selling in a bull flag.

I'm short market order @ 1.4150 with targeting 1.4045 and 1.3960 with stop @ 1.4205. Target or not I will kill...
yes i will give it back to u

lol no movement in markets. BORING!.. hehehe
Have I got something on my face, SOLDIER?
  • #6,114
  • Oct 28, 2011 10:23am Oct 28, 2011 10:23am
Somebody dumped another truckload of US$ but the effect was mostly commodity currencies and the GBP. Swissy and Yen barely moved.
I don't care which way the market is going as long as it's going my way
  • #6,115
  • Oct 28, 2011 10:25am Oct 28, 2011 10:25am
Quoting bumapatria
yes i will give it back to u

lol no movement in markets. BORING!.. hehehe
TY
I don't care which way the market is going as long as it's going my way
  • #6,116
  • Oct 28, 2011 10:26am Oct 28, 2011 10:26am
Quoting PipKiller
I'm short market order @ 1.4150 with targeting 1.4045 and 1.3960 with stop @ 1.4205. Target or not I will kill this trade before the close today.
It doesn't look like this market is going anywhere today. Stuck in a 60 pip range.
Those who say it cannot be done should not interrupt those who are doing it
  • #6,117
  • Oct 28, 2011 10:27am Oct 28, 2011 10:27am
Quoting PipTrapper
It doesn't look like this market is going anywhere today. Stuck in a 20 pip range.
PT -- I am disappointed. I thought you were scalping. I have been. And really it is a 50 pip range.
Kill the ego, or it will kill the mission.
  • #6,118
  • Oct 28, 2011 10:28am Oct 28, 2011 10:28am
Quoting PipKiller
TY
your welcome sergeant... im still ur superior though lol..

looks like my trade is going to be a loooong swing trade into the future of next week.

exactly why i dont divide cycles as much.

and come on people stop treating me like a kid gosh..

no one really got the soup story did they?

i honestly dont mind people analyzing with thousands of indis on their chart, which i cant even do with 2 or 1.... i admire people doing different things. i like people who do things i cant.
Have I got something on my face, SOLDIER?
  • #6,119
  • Oct 28, 2011 10:29am Oct 28, 2011 10:29am
I think the $ will rise when the us session stands by its own.
  • #6,120
  • Oct 28, 2011 10:32am Oct 28, 2011 10:32am
Quoting bumapatria


no one really got the soup story did they?
Soup story? I missed it...
Kill the ego, or it will kill the mission.
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