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  • #6,321
  • Oct 30, 2011 5:56am Oct 30, 2011 5:56am
Quoting AaronWard
tom, I am glad you like the charts, you might want to read a bit about CBs though. they have a lot more power than you think. And also look at Also, some of the fastest growing economies in the world (ie China) use a currency peg. Anyway, I am not going to argue it.
I studied central banking systems for five years. I have only bachelors degree, but focused on monetary policy, fiscal stimuls and capital markets. Lots of knowledge here, few experience. I studied balance sheets of all major central banks around the world and measured impact of each and every policy they can use. There is a whole science based in mathematics exploring these issues, called econometrics. I dont get fooled easily with talks like: "You dont understand it Tomas, read something about it." , simply because I have read hoardes of it. So either prove you are right, or dont send me to read some . I think I made my point where do losses of CB come from. They accumulate and they are huge. At some point, they will have to take responsibility and will be forced to step away. Historia est magistra vitae.

Kind regards,

Tom
"I know one thing, that I know nothing." Sokrates
  • #6,322
  • Edited 10:14am Oct 30, 2011 6:23am | Edited 10:14am
Quoting Tom_D_Trader
I think I made my point where do losses of CB come from. They accumulate and they are huge. At some point, they will have to take responsibility and will be forced to step away.
I am with you all the way on this Tom and I have been maintaining it all the way through. At some point the poop has to hit the fan, and it will.

The only issue now is how long will these CBs continue to keep the poop from flying towards the fan. It is a con, and normal citizens have been slowly waking up to it. It shouldn't be long now, but these things are not measured in days but rather years. Therefore, it will be of no use to us on Monday.

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Those who say it cannot be done should not interrupt those who are doing it
  • #6,323
  • Oct 30, 2011 6:38am Oct 30, 2011 6:38am
I made a bit cycle research, mainly because of Buma, but several people here were interested in this mumbo jumbo, se here it goes:

The longest term and totally useless Mumbo Jumbo ever witnessed:

Statisics of Daily closing prices in period 1992 - till now.

For measuring of cycles, I am looking for lows now, but since it is exchange rate, it could be highs as well. There are just too many angles you can use for looking at cycles. Selection of points for measuring is higly individual, and thats why I call it mumbo jumbo. Nevertheless, I have found this point of view interesting.

Lenght of cycles from low to another low, is written in column "Lenght PP - LL" at the end of the cycle (rest stats are at the beginning of each wave, but I am just lazy to rewrite macro)

As you can see, major cycles range between 1611 days and 1848 days.
From this point of view it seems, last (third) destructive cycle started at 6.6.2010 and Euro is doomed. Ou yea, I am bearish, dont you forget!

"Minor cycles" range between 471 and 705 days, while average beeing 545.

Now, exploration of the past is nice, but what are the outcomes.

Last identified end of cycle was at 6.6.2010 and 3.10.2011 low @ 1,32 was 484 days away. If this is accounted as a final low of current minor cycle, we are in stage 2 confirming major level 3 cycle, which should be going down already. Since we aint, I assume we are still in first part of the cycle and final low will come at 6.6.2010 +avg (543 days) to max(705 days), which is somewhat like 1.12.2011 till 11.5.2012.

Grade one minor cycles show further evolution of major ones. Moreover, these cycles are very volatile, as investor crowd fears and doesnt know where to go after crash. Thats why it is most important to manipulate crowd during first cycle and be assured CB knows about that. Right now, they are trying to manipulate the crowd so it seems no third cycle is starting, but in fact it is. At least according to Mumbo Jumbo!

I hope you enjoyed.

Tom
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"I know one thing, that I know nothing." Sokrates
  • #6,324
  • Edited 7:05am Oct 30, 2011 6:49am | Edited 7:05am
Quoting Tom_D_Trader
I studied central banking systems for five years. I have only bachelors degree, but focused on monetary policy, fiscal stimuls and capital markets. Lots of knowledge here, few experience. I studied balance sheets of all major central banks around the world and measured impact of each and every policy they can use. There is a whole science based in mathematics exploring these issues, called econometrics. I dont get fooled easily with talks like: "You dont understand it Tomas, read something about it." , simply because I have read hoardes of it....
Sounds like you might know more than me... so answer the following questions if you have the time.

Where did the 850 billion or so in foreign exchange reserves come from that Japan has?
Does Taiwan have a floating currency or a peg?
Why is the SNB worried about inflation and not running out of money with their currency ceiling?

EDIT: One more question.. how did the Plaza accord work and how did the Louvre Accord work if CBs working together are not able to control their respective currencies.
Kill the ego, or it will kill the mission.
  • #6,325
  • Oct 30, 2011 6:57am Oct 30, 2011 6:57am
Quoting PipTrapper
... Therefore, it will be of no use to us on Monday.
Absolutely no use on Monday. I think you already know me and know I just like to explore fun-da-mentals.

I am flat like an airport now, unil I see Grade 2 H4 trend down with strenght at least 130%. So possibly flat for whole week, maybe if it breaks on Monday, I may enter @ Thursday.

T.
"I know one thing, that I know nothing." Sokrates
  • #6,326
  • Edited 7:34am Oct 30, 2011 7:17am | Edited 7:34am
Quoting AaronWard
Where did the 850 billion or so in foreign exchange reserves come from that Japan has?
I assume thats partially the link with FED. We have been discussing coordinated manipulation by CBs here a lot, it is a well known issue.

Second part of answer lies within Japan economy. As they are heavily proexporting economy, they are intervening in long term by selling their currency (and accumulating losses ), thus buying foreign exchange reserves, which accumulate after some time. Japan is exporting for quite some time now.

Quoting AaronWard
Does Taiwan have a floating currency or a peg?
Dunno, I could probably google it very fast, but I just dont care about Taiwan right now. I know I should as they have @ 10% gdp growth, but sadly, I dont have enough time.

Quoting AaronWard
Why is the SNB worried about inflation and not running out of money with their currency ceiling?
Why are they worried about inflation while flooding market with CHF in order to save exports? Isnt that obvious? More CHF = less CHF value.

SNB worries a lot. In fact they shit in their pants right now and they stand only because FED is pumping them with money. I have already read several news, where local Swiss politicians and bankers were forcing SNB leaders to step away, before accumulating more losses.

Btw, whole Swiss intervention started, because it was forced by Swatch CEO and some second CEO which I dont remember (But I think it was some concrete manufacturer, or builder), as the safe heaven flight was dumping their exports.

EDIT: "How did the Plaza accord work and how did the Louvre Accord work if CBs working together are not able to control their respective currencies."

I kinda dont get the question here. Those are historical moments, where CBs coordinated their actions. So there is a parallel with current CB actions and they may be doing simmilar thing which is lessening dolar value (EURUSD goes up). Effect of such a coordinated intervention lasted for about a year. Yet there was hardly any FX market back then. Nowadays, daily turnaround in FX exchange is about 3 trillion USD. Most of this force comes from institutional investors, power of CB vastly dropped since 1980s. Now you can consider Morgan stanley and company as kind of a new world central banks.

T.
"I know one thing, that I know nothing." Sokrates
  • #6,327
  • Oct 30, 2011 7:32am Oct 30, 2011 7:32am
Quoting Tom_D_Trader
I assume thats partially the link with FED. We have been discussing coordinated manipulation by CBs here a lot, it is a well known issue.

Second part of answer lies within Japan economy. As they are heavily proexporting economy, they are intervening in long term by selling their currency (and accumulating losses ), thus buying foreign exchange reserves, which accumulate after some time. Japan is exporting for quite some time now.



Dunno, I could probably google it very fast, but I just dont care about Taiwan right now. I know...
The part you are missing is that the SNB has a printing press. They don't have a loss when they sell their own currency. But the printing of their currency may unleash inflation.

Same with Japan & China. They don't "raise yen" or "Raise yuan" from tax payers... they print it (well, create it electronically).

Taiwan is a "floating" currency that usually trades in quite a tight range on the USD due to manipulation by their CB. So in reality it is more of a peg. The hundred billion or so USD again was not "raised" from tax payers.

And how about the two accords...how did they work... how could they work... unless, in fact CBs are able to control currency rates if they really feel like it.
Kill the ego, or it will kill the mission.
  • #6,328
  • Edited 8:08am Oct 30, 2011 7:56am | Edited 8:08am
Hehehe, it seems you aint listening at all what I say. Or maybe you aint interested.

Quoting AaronWard
The part you are missing is that the SNB has a printing press. They don't have a loss when they sell their own currency. But the printing of their currency may unleash inflation.
Same with Japan & China. They don't "raise yen" or "Raise yuan" from tax payers... they print it (well, create it electronically).
Printing cash is NOT for free, you have to sell those trash papers and market takes its price. Right now, SNB is selling CHF, while they are worthless, producing inflation. This effect, although it boosts exports, lowers value of all assets within country as they are all priced in their currency. Only way how country profits of printing is while exports arise and I just dont see Swiss export rising right now, when all EU is in trouble.

Moreover, they intervene by buying foreign exchange reserves. That means they have opened short positions in CHF, and once market prevails and crushes them to their knees, CHF will fly high and they will suffer huge losses.

Quoting AaronWard
Taiwan is a "floating" currency that usually trades in quite a tight range on the USD due to manipulation by their CB. So in reality it is more of a peg. The hundred billion or so USD again was not "raised" from tax payers.
I really dont care about Taiwan. Sure, there are nations with crawling peg, currency basket, or fixed exchange rate, where those rates can be manipulated. But I just dont see impact of Taiwan currency to EURUSD right now.

Quoting AaronWard
And how about the two accords...how did they work... how could they work... unless, in fact CBs are able to control currency rates if they really feel like it.
They worked for about a year, because there was no FX market in 1980s. Therefore, CBs could stand against the weak market for longer time. Now daily turnaround is 3 Trillion. What is FEDs poor QE of 400 Bn during several months when compared to such a vast amount? Trillions daily for gods sake. Only Citigroup with Morgan Stanley alone could crush FED, but it is just easier to wait untill they bleed.

T.
"I know one thing, that I know nothing." Sokrates
  • #6,329
  • Oct 30, 2011 8:17am Oct 30, 2011 8:17am
Tom,


Yeah, actually, I am losing interest. Cheers.
Kill the ego, or it will kill the mission.
  • #6,330
  • Oct 30, 2011 8:25am Oct 30, 2011 8:25am
I have found you a recent example on how losses accumulate.

Here is a table of foreign exchange reserves of SNB. During 2010, they intervened by buying Foreign exchange reserves. Most of these were JPY and were bought in Q2 2010. So since Q2 2010, they are long at JPY. I suggest to check yer charts, where did JPY went since then. 1,35 Tril of Yen bought during 2010. Thats incredibly huge loss.

http://www.snb.ch/ext/stats/balsnb/p...en_der_SNB.pdf

T.
"I know one thing, that I know nothing." Sokrates
  • #6,331
  • Oct 30, 2011 8:28am Oct 30, 2011 8:28am
Quoting AaronWard
Tom,
Yeah, actually, I am losing interest. Cheers.
Bad luck for you . Intelectual debate cleares mind and moves you forward. I hope you will try to read it later and think of my reasons.

Kind regards,

Tom
"I know one thing, that I know nothing." Sokrates
  • #6,332
  • Edited 9:07am Oct 30, 2011 8:53am | Edited 9:07am
Quoting Tom_D_Trader
Bad luck for you . Intelectual debate cleares mind and moves you forward. I hope you will try to read it later and think of my reasons.

Kind regards,

Tom
Tom,

It is useful if I am covering new ground. But this is stuff that has been rehashed over and over again in a variety of forums on FF. I can't even begin to count the number of times I have heard "The markets will bring the SNB to their knees". I even know people that shorted the Swissy. They lost out on that one. Going through all the details for yet another time... is only going to bore me to tears.

I did all my arguments the day the Swissy intervened and I bet my account with maximum leverage on the market's inability to break the SNB. I didn't even use a stoploss...I figured a margin call at 1.1975 would do just fine. I tripled my account before I closed out a few days later. Best bit of fundamental trading I have ever done.

If you are interested you can look at previous posts that I made the day of the intervention.

Aaron
Kill the ego, or it will kill the mission.
  • #6,333
  • Oct 30, 2011 9:01am Oct 30, 2011 9:01am
Quoting Blobik
After all, if the storm comes, you can buy USD even a bit late, and there is high probability you will profit from it. But if storm does not come, then why hold USDs?
I am waiting for the storm, no matter how long does it take and want to buy it late. I have my job, I aint dependent on trading.

"If storm doesnt come." That is what they hope for. Sometimes, I think they are going to manage to kick the can down the road for such a long time, that investors will eventually forget that there was a crisis and confidence will be restored .

T.
"I know one thing, that I know nothing." Sokrates
  • #6,334
  • Oct 30, 2011 9:06am Oct 30, 2011 9:06am
Quoting AaronWard
If you are interested you can look at previous posts that I made the day of the intervention.
No Aaron, I aint interested. It surely was a great deal made by you and I wish you the best, but it has absolutely nothing in common with the macro scheme we (I) were currently exploring.

And I dont care about FF gossip. Just take a look at SNB ballance sheet.

T.
"I know one thing, that I know nothing." Sokrates
  • #6,335
  • Oct 30, 2011 9:21am Oct 30, 2011 9:21am
Quoting Tom_D_Trader
I am waiting for the storm, no matter how long does it take and want to buy it late. I have my job, I aint dependent on trading.

"If storm doesnt come." That is what they hope for. Sometimes, I think they are going to manage to kick the can down the road for such a long time, that investors will eventually forget that there was a crisis and confidence will be restored .

T.

Tom,

I am sure I don't have to tell you this, but I am writing it so others who do not know, may be enlightened.

Throughout the history of the FOMC, the can has been kicked and kicked down the road. They are experts at it. It is in their best interest to do it and it helps the big banks and corporations that influence the FOMC get richer and richer through more interest earned on more debt that is taken out to pay for the previous interest, etc etc.

Money creation can never stop without the consequence of economic contraction and/or failure. It is the nature of our monetary system. The FOMC is designed to fail... and one day it will, but not before all the other countries are bilked from their riches.

The EZ is next.

Cheers,
PT

P.S. It is all one big Ponzi Scheme.
Those who say it cannot be done should not interrupt those who are doing it
  • #6,336
  • Oct 30, 2011 9:23am Oct 30, 2011 9:23am
As Monday approaches, I am going to stop spamming about macro scheme. I hope you enjoyed this little trip to monetary policies.

So last two days both closed in Tom Zone Grade 1.

Prediction for the upcoming week:
Retest of upper boundaries of the zone and last weeks high and ranging between boarders. Low boarder 1,3936, High boarder 1,42. As 1,425 was almost touched, beware of spikes up, they may try to reach it.

Good luck to all,

Tom
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"I know one thing, that I know nothing." Sokrates
  • #6,337
  • Oct 30, 2011 9:30am Oct 30, 2011 9:30am
Quoting PipTrapper
I am sure I don't have to tell you this, but I am writing it so others who do not know, may be enlightened.
I know, I actually wrote this thought (can kicking can help) to Sisse once as a joke and he almost feeled offended that I think such a nonscence.

I hope he wont be offended if I post it here. If you are Sisse, I am deeply sorry and wont do it again.

"No. Kicking the can, has it's limit, IMO they already pass the limit. Bond markets (check EZ CDS, Spreads and BOnds) are not giving a further options.

The levels are way out of the "kicking the can" levels. France and Italian (two majors) are in unsustainable levels for their size. So either the make a clear solution and flood the markets with liquidity and free money (at a high political cost) or they make a clean break with Greece meaning default, lots of money and a huge institutional reform on fiscal union, bla, bla announcement...anything less than that will have a very nasty reaction and probably mark a no way back point in the euro and EZ..."

sisse
"I know one thing, that I know nothing." Sokrates
  • #6,338
  • Oct 30, 2011 9:39am Oct 30, 2011 9:39am
Quoting Tom_D_Trader
I know, I actually wrote this thought (can kicking can help) to sisse once as a joke and he almost feeled offended that I think such a nonscence.

I hope he wont be offended if I post it here. If you are Sisse, I am deeply sorry and wont do it again.

"No. Kicking the can, has it's limit, IMO they already pass the limit. Bond markets (check EZ CDS, Spreads and BOnds) are not giving a further options.

The levels are way out of the "kicking the can" levels. France and Italian (two majors) are in unsustainable levels for their size. So...
Well actually I guess it's a matter of semantics. What I meant by "can kicking" was monetization of debt, which is exactly what sisse is suggesting as a solution, besides the second option of fiscal union. However, even with fiscal union, the debt is still there but the "poop-hit-fan" day of reckoning is delayed once more (can kicking again). Eventually, the debt will grow larger and it will have to be monetized. This cycle will keep going on until €30,000,000,000 will not even buy you a stick of chewing gum.
Those who say it cannot be done should not interrupt those who are doing it
  • #6,339
  • Oct 30, 2011 9:41am Oct 30, 2011 9:41am
Quoting PipTrapper
Well actually I guess it's a matter of semantics. What I meant by "can kicking" was monetization of debt, which is exactly what sisse is suggesting as a solution, besides the second option of fiscal union. However, even with fiscal union, the debt is still there but the "poop-hit-fan" day of reckoning is delayed once more (can kicking again). Eventually, the debt will grow larger and it will have to be monetized. This cycle will keep going on until €30,000,000,000 will not even buy you a stick of chewing gum.
PT -- even then, it will be worth more than the USD.
Kill the ego, or it will kill the mission.
  • #6,340
  • Oct 30, 2011 9:45am Oct 30, 2011 9:45am
Quoting PipTrapper
I am with you all the way on this Tom and I have been maintaining it all the way through. At some point the poop has to hit the fan, and it will.

The only issue now is how long will these CBs continue to keep the poop from flying towards the fan. It is a con, and normal citizens have been slowly waking up to it. It shouldn't be long now, but these things are not measured in days but rather years. Therefore, it will be of no use to us on Monday.

http://www.youtube.com/watch?v=EewGMBOB4Gg

hiii ,

I', sure this old man will give you a clear view about this strange economy around us !!


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