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EurAnalysis Kindergarten 24 replies

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  • #24,121
  • Mar 12, 2012 9:52pm Mar 12, 2012 9:52pm
Quoting RodMca
Yea no problem its something called interest parity condition.
It involves using current interest rates to calculate future exchange rates between two countries.
The formula is: E=(1+it)^n/(1+it)^n...
Interest Rate Parity Model is a critical tool for FA Trader. Major banks and financial institutions use some of the below models to examine market conditions and forecast currency values.

•Balance of Payments Model
•Purchasing Power Parity Model
•Monetary Model
•Real Interest Rate Differential Model
•Asset Market Model
•Currency Substitution Model

Interesting thing is these all have different conditions and you will not get exact value applying the different models.

So If Interest rate Parity Model gives you 1.17xx for E/U .. Purchasing Power Model may give you a lower value considering the Inflation of both of the countries.

Where Relative PPP would be higher than the Absolute PPP but IRP then giving higher value than Relative PPP!

Conclusion : This is again upto you where you feel comfortable considering a model for you.
  • #24,122
  • Mar 12, 2012 10:00pm Mar 12, 2012 10:00pm
http://www.ekathimerini.com/4dcgi/_w...03/2012_432597

Juncker says no need for third bailout if program is implemented



http://sup.kathimerini.gr/kath/engs/...s_390_1203.jpg http://wwk.kathimerini.gr/kathnews/images/dot_clear.gif Greece had not received final approval from eurozone finance ministers for its new 130-billion-euro bailout by late on Monday night, but the mood at the Eurogroup meeting in Brussels was much more positive than in previous weeks following the near-completion of the restructuring involving Greek bondholders.
The head of the Eurogroup, Jean-Claude Juncker, had encouraging words for Greece, marking a distinct change to the recent atmosphere at these gatherings of finance ministers, where there had been skepticism about the country’s future. Speaking to Skai TV’s “New Files” program, Juncker insisted there was no question of Greece leaving the eurozone.

“I never doubted that Greece would remain in the euro and I never will,” said Juncker. “Greece is an old European democracy but it is facing huge problems. It is taking the measures we asked for and I cannot see any reason that we should continue this silly discussion. We are feeding the markets with our speculation. I will never take part in this.”

Juncker said that once approved, Greece’s second bailout should also be its last if Athens sticks to the reform and fiscal targets it has agreed with the eurozone and the International Monetary Fund. However, in keeping with recent comments by German Finance Minister Wolfgang Schaeuble, Juncker did not rule out the possibility a third package would be needed.

“It depends on the way the second program is implemented,” he said. “If Greece continues to take effective measures, reduces its fiscal deficit, in other words if it implements the program, I don’t see the need for a third support package of similar size.”

Speaking to reporters before the Eurogroup, Juncker said there was “no doubt” that the second bailout for Greece would be approved but that this would probably happen on Wednesday.

The implementation of the reform program will be at the center of discussions between the head of the EU Task Force, Horst Reichenbach, and ministers this week. Reichenbach arrived in Athens on Monday and is due to meet several members of the Cabinet before delivering the Task Force’s quarterly report.

The size of the Task Force in Greece is to be increased and members are due to be stationed permanently at ministries to oversee the reforms Athens has pledged to implement.
ekathimerini.com , Monday March 12, 2012 (23:22)
  • #24,123
  • Mar 12, 2012 10:27pm Mar 12, 2012 10:27pm
http://www.streettalklive.com/daily-x-change/749-employment-report-and-the-market.htmlhttp://www.streettalklive.com/daily-x-change/749-employment-report-and-the-market.html

Unfortunately, this effect is not just related to Japan. The chart shows the S&P 500 versus the employment to population ratio in the U.S. (the dotted lines are estimates for demographic shift in the economy) The rise and fall of the financial markets coincide with the adjustments to the level of employment in the economy. The lack of real employment relative to the population, as a whole, has a long term impact on the financial markets. If the economy remains at sub-par growth rates for an extended period the employment to population ratio will continue its decline. This will lead to more assets being taken out of the investment scheme in order to fund basic living requirements. This fact will be further compounded by the massive underfunding of pension schemes that are still banking on very high rates of return to shore up a decade of shortfalls. Eventually, the strain on the system over time will be reflected in the financial markets.

Much like Japan the battle in the future will be the effect of net withdrawals from the financial system. As more and more individuals move into retirement, either by choice or force, it will contribute to sustained higher levels of real unemployment. While the headlines are replete with messages of employment growth and a return of the economy - the real question should be the return of what type of economy? The structural shift of employment into lower income producing jobs doesn't bode well for a resumption of economic prosperity or a stock market that will embark on the next great secular bull market run.
For economists and mainstream analysts the trend of the data is far more important than the headlines. For investors it is critically important to understand the impact of a sustained decline in the employment to population ratio. This is the P/E ratio that we need to be watching in the future.
  • #24,124
  • Mar 12, 2012 11:58pm Mar 12, 2012 11:58pm
knoholygrail

Capitalism's next phase will inevitably be marked by a concentration of assetised wealth in the hands of money pools and high net worth individuals (as well as cash surplus). The only role of the masses will ultimately be that of consumer of the valued added consumables manufactured in low cost destinations. There will be no need for popular capitalism (with the end of the Cold War) and with the resulting deregulation, the forces of concentration will work in an unfettered way. These are objective forces...no bad evil scheming bankers or bloated fat cats. Left to its own devices, the trend must and will be for the rising to the top of those with the capacity to accumuate (and amongst them will be the unscrupulous as well as those with the capacity to harness the underlying impulses that characterise capitalism.
The road to pipland is arduous and fraught with challenge.
  • #24,125
  • Mar 13, 2012 1:40am Mar 13, 2012 1:40am
  •  AFXFin
  • | Joined Oct 2011 | Status: Price don't have a mind of it's own | 915 Posts
If anyone is interested here is some speeches and auctions, which are not listed in FF calendar.

GMT

8:00EUR EU Finance Ministers Meet in Brussels
8:00EUR "EU's Van Rompuy, Barroso Speak to European Parliament"
8:35GBP Bank of England's Tucker Speaks in London
10:00EUR Bundesbank Publishes 2011 Annual Accounts
10:15EUR ECB Announces Allotment in 7-Day Main Refinancing Tender
10:15EUR ECB Announces Allotment in 1-Month Refinancing Tender
10:45EUR "Finland's Katainen, Former ECB President Trichet Speak"
11:30EUR ECB's Draghi Speaks in Paris
12:00EUR ECB Allots 7-Day Term Deposits
13:00EUR ECB's Weidmann Speaks After Bundesbank Publishes Annual Report
14:30EUR EU's Van Rompuy Speaks in Paris
15:00EUR EU's Barnier Gives Speech on Competitiveness to Lawmakers
15:30USD U.S. to Sell 4-Week Bills
17:00USD U.S. to Sell USD21 Bln 10-Year Notes Reopening
18:15USD FOMC Rate Decision
JPY BOJ Target Rate
  • #24,126
  • Mar 13, 2012 3:40am Mar 13, 2012 3:40am
Quoting AFXFin
Quite ambitious. Are you going to hold your shorts till then? It takes a time to reach that level, though fully realistic.
haha. No, I like to take profit periodically but I might hold some long term positions after I take some partial profit on them.
Those who say it cannot be done should not interrupt those who are doing it
  • #24,127
  • Mar 13, 2012 3:42am Mar 13, 2012 3:42am
Quoting FXMindset
Good Morning,

Trying long @ 1.3160 Stop @ 1.3078 Risk 1% TP : Open
Stop Out 15
If there was easy money lying around,no one would be forcing it into your
  • #24,128
  • Mar 13, 2012 3:46am Mar 13, 2012 3:46am
Quoting rekon67
Interest Rate Parity Model is a critical tool for FA Trader. Major banks and financial institutions use some of the below models to examine market conditions and forecast currency values.

•Balance of Payments Model
•Purchasing Power Parity Model
•Monetary Model
•Real Interest Rate Differential Model
•Asset Market Model
•Currency Substitution Model

Interesting thing is these all have different conditions and you will not get exact value applying the different models.

So If Interest rate Parity Model gives you 1.17xx for E/U...
Very true. I leave the mathematical calculations for the banks and other institutions. My methods of projection are based on sound logic derived from underlying economic and political drivers in combination with proven technical chart patterns.

http://www.demotivationalposter.com/...simplicity.jpg
Those who say it cannot be done should not interrupt those who are doing it
  • #24,129
  • Mar 13, 2012 3:54am Mar 13, 2012 3:54am
Quoting FXMindset
Stop Out 15
I hope I got your money.
Got a nice low risk signal.
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd m30 nomnom.png Size: 50 KB
  • #24,130
  • Mar 13, 2012 3:54am Mar 13, 2012 3:54am
  •  AFXFin
  • | Joined Oct 2011 | Status: Price don't have a mind of it's own | 915 Posts
Quoting PipTrapper
http://www.demotivationalposter.com/...simplicity.jpg
Ok... this brand new simplicity strategy in picture works that once price has moved 2 centimeter right and 1.5 centimeter up, you open a position?
And you close position on top right corner?

Quite simple...
  • #24,131
  • Mar 13, 2012 3:56am Mar 13, 2012 3:56am
Quoting rekon67
•Balance of Payments Model
•Purchasing Power Parity Model
•Monetary Model
•Real Interest Rate Differential Model
•Asset Market Model
•Currency Substitution Model
Hi,

you have forgotten Big Mac index. That is an serious issue.

T
"I know one thing, that I know nothing." Sokrates
  • #24,132
  • Mar 13, 2012 3:59am Mar 13, 2012 3:59am
Quoting Tom_D_Trader
Hi,

you have forgotten Big Mac index. That is an serious issue.

T
Hi Tom how are you? How's your job? Where is the submarine?
  • #24,133
  • Mar 13, 2012 4:05am Mar 13, 2012 4:05am
Quoting rekon67
Hi Tom how are you? How's your job? Where is the submarine?
I am fine, thx for asking. Hope you are all in green. I aint desperately looking for job now, as I live in a lazy and decadent Europe and made some savings. Btw, I managed to double FX account from savings, so currently I am remapping strategy and preparing for new shorts. And still holding "Lucky", form ,3843 and one more from ,3768.

So, the submarine is rolling and ready to roll some more.

Edit: Btw, this Big mac index is really funny stuff, try check it out. I think it works much better as inflation measure than CPI.
1 more edit: And burger economics point Euro towards 1,05, so lets say parity.

T
"I know one thing, that I know nothing." Sokrates
  • #24,134
  • Mar 13, 2012 4:10am Mar 13, 2012 4:10am
Quoting Tom_D_Trader
I am fine, thx for asking. Hope you are all in green. I aint desperately looking for job now, as I live in a lazy and decadent Europe and made some savings. Btw, I managed to double FX account from savings, so currently I am remapping strategy and preparing for new shorts. And still holding "Lucky", form ,3843 and one more from ,3768.

So, the submarine is rolling and ready to roll some more.

Edit: Btw, this Big mac index is really funny stuff, try check it out. I think it works much better as inflation measure than CPI.

T
Excellent Tom! Looking forward to see some pictures of your submarine =)
  • #24,135
  • Mar 13, 2012 4:12am Mar 13, 2012 4:12am
Quoting Tom_D_Trader
...
Edit: Btw, this Big mac index is really funny stuff, try check it out. I think it works much better as inflation measure than CPI.
1 more edit: And burger economics point Euro towards 1,05, so lets say parity.

T
ok
Attached Image
  • #24,136
  • Mar 13, 2012 4:33am Mar 13, 2012 4:33am
how many pairs our lovely members in this thread trade here or just stay focused only one
If there was easy money lying around,no one would be forcing it into your
  • #24,137
  • Mar 13, 2012 4:35am Mar 13, 2012 4:35am
  •  AFXFin
  • | Joined Oct 2011 | Status: Price don't have a mind of it's own | 915 Posts
Quoting Tom_D_Trader
I am fine, thx for asking. Hope you are all in green. I aint desperately looking for job now, as I live in a lazy and decadent Europe and made some savings. Btw, I managed to double FX account from savings, so currently I am remapping strategy and preparing for new shorts. And still holding "Lucky", form ,3843 and one more from ,3768.

So, the submarine is rolling and ready to roll some more.

Edit: Btw, this Big mac index is really funny stuff, try check it out. I think it works much better as inflation measure than CPI.
1 more edit: And...
Actually Big Mac index is quite good economy indicator, since it has direct relation to income of local population, thought Recon's chart is not that accurate - there is price differences in Eurozone as well.

Here is finnish prices and according to chart it is much higher.


Attached Image
  • #24,138
  • Mar 13, 2012 4:37am Mar 13, 2012 4:37am
I am just reading WEO Update from IMF and they are advising awesome things.
http://www.imf.org/external/pubs/ft/...e/01/index.htm

One quote for all:
"While fiscal consolidation proceeds in the advanced economies, monetary policy should continue to support growth, as long as inflation expectations remain anchored and unemployment stays high. If downside risks to growth materialize, further monetary stimulus—including through quantitative easing—may well be necessary"

Ok, I have no problem with can kicking. I have already acknowledged they wont stop, so lets just make some cash out of it.

Btw, I dont see any anchored inflation, but it may just be me.

T
"I know one thing, that I know nothing." Sokrates
  • #24,139
  • Mar 13, 2012 4:48am Mar 13, 2012 4:48am
I just found out that I have two new vouchers, from Mindset and Rekon. Thank you for your confidence guys. As I know that I know nothing, I am always very happy when someonce values my posts.

So thanks again, I will do my best to keep your confidence.

T
"I know one thing, that I know nothing." Sokrates
  • #24,140
  • Mar 13, 2012 4:52am Mar 13, 2012 4:52am
Quoting Tom_D_Trader
I just found out that I have two new vouchers, from Mindset and Rekon. Thank you for your confidence guys. As I know that I know nothing, I am always very happy when someonce values my posts.

So thanks again, I will do my best to keep your confidence.

T
No problemento
If there was easy money lying around,no one would be forcing it into your
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