EurAnalysis

http://chartingwallstreet.com/wp-con...butterfly1.png

The Butterfly Pattern can be bullish or bearish

Thank you Guys for the awards..of PHD..am so touched...huhuhu

Daily Forex Brief
London: Wednesday 25th April 2012

China's grim warning
In what can only be described as a remarkably candid assessment, China's Ministry of Industry and Information Technology overnight claimed that both domestic and external conditions were still 'grim' and that the economy was likely to endure further downward pressure. Companies in China are confronting growing operational difficulties, including much higher prices for energy and substantially higher wages. Interestingly, there has been little response in Asia overnight to this report, with equities becalmed ahead of tonight's FOMC decision and Friday's BoJ meeting. In foreign exchange markets, even the Aussie ignored the warning, which is unusual because it is invariably extremely sensitive to changes in China's economic outlook. Instead, it appears that more attention was paid to Premier Wen Jiabao's promise to stimulate the economy through additional policy measures if required. More stimulus from Beijing cannot be far away because it is clear that the economy needs it to achieve the growth targets set by policy-makers.
http://www.fxpro.com/sites/default/f...perf%2024h.png

Later Folks ... I hope a liittle bit more fight from EUR and NY Bullish yet to get a satisfactory Sale point.

Thanx!! Cuts allot of work. Though great things dont come easy, time to research and read.

PHD, heh, i wish to get to that level, congrats FXM!

Hi everyone, wow 2nd time i been here in 2 days. I managed to claw back some pips with g/u earlier and i scalped a few pips on e/u. i had a buy opportunity on both the 1 hr and 4 hr chart. but due to no confidence i got out lol.

April 25, 2012

The Bundesbank's in Hot Water... Will It Take the Heat or Throw the ECB Under the Bus?

Yesterday we discussed the political fall-out for German Chancellor Angela Merkel regarding revelations that the Bundesbank has in fact put Germany on the hook for over €2 trillion via various back-door deals.

Today we need to consider how those same revelations will impact the Bundesbank itself. Already we're seeing its head Jens Weidmann (also a policymaker at the ECB) taking a hard-liner approach to dealing

Weidmann says not ECB's job to tackle Spain's problem

Spain should take a rise in its bond yields as a spur to tackle the root causes of its debt woes, not look to the European Central Bank to help by buying its bonds, European Central Bank policymaker Jens Weidmann told Reuters.

Weidmann, who has led a push by some policymakers from core euro zone countries for the bank to begin planning an exit from its crisis mode, said no ECB policymakers favoured using the bank's bond-buying plan to target specific interest rates on sovereign bonds, and ECB board member Benoit Coeure was simply stating a fact by saying last week that the programme still existed.

In a wide-ranging interview, Weidmann, who turns 44 on Friday, also said he saw no reason to discuss a third LTRO, the funding instrument with which the ECB has pumped over 1 trillion euros into financial markets since late last year.

Weidmann, who is head of Germany's Bundesbank, which gives him a powerful voice on the ECB's 23-man Governing Council, spoke to Reuters against a backdrop of growing tensions in Spain, where benchmark sovereign bond yields are near the closely watched 6 percent level.
http://uk.reuters.com/article/2012/0...83H0C820120418

Relations between the ECB and Bundesbank have been deteriorating for some times now. Disgusted with its monetary profligacy, two Bundesbank officials Axel Weber and Jürgen Stark, resigned from the ECB last year. Since that time Weidmann and the Bundesbank have fired a warning shot across the ECB's bow.

Germany launches strategy to counter ECB largesse

The plans have major implications for monetary union, dashing hopes in Southern Europe that Germany might accept a few years of mini-boom at home to help lift the whole system off the reefs.
Andreas Dombret, a key board member of the Bundesbank, said the body would be given powers to check "excessive credit growth" and impose "maximum leverage ratios" to nip economic overheating in the bud.

The Bundesbank will be able to impose "counter-cyclical capital buffers" on lenders, and use "macro-prudential haircuts" in the securities markets. It is understood that the menu of new tools will include limits on the loan-to-value on mortgages along the lines of those used in Hong Kong and other Asian states.

The new framework - introduced by German government in a draft law this week - is partly inspired by the Bank of England's new system but it also has a German twist...

German house prices rose 5.6pc last year after a decade of stagnation. Officials in Frankfurt are watching the property data closely, fearing that Germany may succumb to the sort of housing bubble that engulfed the Club Med bloc in the early years of EMU.

"The Bundesbank does not want to be blamed for making the same mistakes as central banks in Ireland and Spain where they did not address asset bubbles early enough," said Bernhard Speyer from Deutsche Bank.

The German authorities are in effect preparing a form of quasi-monetary tightening to offset ECB largesse...

"If the eurozone is to adjust, southern countries must be able to run trade surpluses, and that means somebody else must run deficits," said Dr Speyer.

"One way to do that is to allow higher inflation in Germany but I don't see any willingness in the German government to tolerate that, or to accept a current account deficit.
http://www.telegraph.co.uk/finance/f...-largesse.html


The ECB recognizes a warning shot when it sees one. Indeed, ECB President Mario Draghi knows that if inflation rises in Germany, the latter will take very serious actions, including potentially threatening to walk out of the Euro:
Draghi Says Inflation Risks Prevail as Economy Stabilizes

European Central Bank President Mario Draghi said policy makers are prepared to act against inflation threats if needed, while assuring investors that the ECB doesn't plan to withdraw emergency stimulus any time soon.


"All the necessary tools are available to address upside risks to price stability in a firm and timely manner," Draghi told reporters in Frankfurt after the ECB held its benchmark rate at a record low of 1 percent today. At the same time, it's premature to talk about the ECB's exit strategy, Draghi said, adding that the economic outlook is subject to downside risks and inflation will remain contained in the medium term.

The ECB is balancing the threat of inflation in Germany, Europe's largest economy, against the need to fight the sovereign debt crisis. While nations from Greece to Spain are battling recessions and record unemployment, workers in Germany are winning some of the biggest pay increases in 20 years.


[ECB President Mario Draghi] declined to comment on recent wage settlements in Germany, where 2 million public service workers are set for a 6.3 percent raise over two years, according to the Ver.di union. It would be the biggest increase negotiated by the union since 1992. IG Metall, Europe's biggest labor union with about 3.6 million workers, is demanding 6.5 percent more pay.
http://www.bloomberg.com/news/2012-0...tabilizes.html

And so the ECB has found its hands tied: if it continues to monetize aggressively, inflation will surge and Germany will either leave the Euro or at the very least make life very, very difficult for the ECB and those EU members asking for bailouts.

After all, doing this would score MAJOR political points for both Merkel and Weidmann who have both come under fire for revelations that the Bundesbank has in fact put Germany on the hook for over €2 trillion via various back-door deals.

Against this backdrop, it's quite clear that the EU's banking system remains under extreme duress. Case in point, European financials have in fact wiped out all of the gains produced by LTRO 2 in just one month's time. Small wonder. When we take a big picture perspective of Europe, the entire banking system is a disaster waiting to happen.
Consider the following:

1. According to the IMF, European banks as a whole are leveraged at 26 to 1 (this data point is based on reported loans... the real leverage levels are likely much, much higher.) These are a Lehman Brothers leverage levels.

1. The European Banking system is over $46 trillion in size (nearly 3X total EU GDP).
2. The European Central Bank's (ECB) balance sheet is now nearly $4 trillion in size (larger than Germany's economy and roughly 1/3 the size of the ENTIRE EU's GDP). Aside from the inflationary and systemic risks this poses (the ECB is now leveraged at over 36 to 1).
3. Over a quarter of the ECB's balance sheet is PIIGS debt which the ECB will dump any and all losses from onto national Central Banks (read: Germany)

So we're talking about a banking system that is nearly four times that of the US ($46 trillion vs. $12 trillion) with at least twice the amount of leverage (26 to 1 for the EU vs. 13 to 1 for the US), and a Central Bank that has stuffed its balance sheet with loads of garbage debts, giving it a leverage level of 36 to 1.

And all of this is occurring in a region of 17 different countries none of which have a great history of getting along... at a time when old political tensions are rapidly heating up.

As bad as the above points may be, they don't even come close to describing the REAL situation in Europe. Case in point, regarding leverage levels, PIMCO's Co-CIO Mohammad El-Erian (one of the most connected insiders in the financial elite) recently noted that French banks (not Greece or Spain) currently have 1-1.5% capital relative to their assets, putting them at leverage levels of nearly 100-to-1.

And that's France we're talking about: one of the alleged key backstops for the EU as a whole.

Best Regards,
Graham Summers
Chief Market Strategist
Phoenix Capital Research

Kno's Comments:

It Is Good To See The Bigger Picture In The Middle Of All The Spin.

wah..greedy neh

hi buddy how are you. i was checking stats and looking for trading opportunities otherwise nothing doing

am fine billyt,just a bit frustated with my current Job..btw do you any picture of yourself,so next time when you are offline,am still can see you well in the picture..as you know how much am missing you...am afraid rekon hunt my ass later when you are gone...

am promised to myself would keep myself purely clean virgin before merid...but ho rekon keep....dont want to said further...hiks..

+30 pips EU
+80 pips GU

1.2KUSD
Short intraday..

Save that money for our children going to university later miza..

Specs to Squeeze EUR ahead of FOMC

Posted by Dean Popplewell at 6:37 am UTC, 04/25/2012

There must be some truth in ‘an apple a day keeps the doctor away.’ Well the EUR bulls would like to believe that. After hours trading yesterday saw Apple earnings release give the risk market some freedom to roam higher. Roam is too strong, probably feel its way higher, but remain in this well defined EUR range ahead of the FOMC release. Trader stops and Mideast buying has been able to lift the ‘single’ currency to these o/n session highs. The bear continues to rely on EU supranational and government names to sell into this rally where significant EZ/Bund tightening spreads support these gains. Today’s focus will be on the FOMC projections.

Will the Fed policy team allow the EUR to get too far ahead of itself? The earlier rate release will see no change of the O/N funds rate. It’s the updated economic and funds rate projections along with helicopter Ben’s press conference that is going to create all the trading fuss. The FOMC statement language is expected to remain largely the same. Maybe a tweak where they might mention the recent moderation in labor market improvement and renewed strains in global financial markets. It’s the ‘official projections’ that are capable of offering potential ‘hawkish’ surprises. The whisper is that maybe one or two of the FOMC officials, in the hawkish minority camp, might have brought forward their call for the first Fed rate hike. The 2014 guidance is not irrevocable, but expected to remain.

Rational distribution of expectations is likely to shift towards an earlier hike. A new theme that appears to be coming to the fore amongst G10 members. In this scenario, the US fixed income class would see shorter term yields creep high, a bias for the dollar against the EUR and probably more so against the JPY ahead of this Friday’s BOJ policy announcement. Quick spec money is likely to prefer a lower dollar ahead of the FOMC statement and Ben’s conference. The market remains short EUR’s and if Ben talks the US economy down, the following short squeeze will have the weaker EUR shorts positions taken out of the game. The techs see the market bias within the three-month range remaining bearish. Investors continue to sell upticks looking for a short-term run into the 1.30’s. Everyone knows that this market is oversold, however, someone has yet to provide a compelling reason to change current market strategies.

UK data this morning confirms that the British economy has officially slid back into recession in Q1. GDP shrank -0.2% in the first three months, complementing the -0.3% fall in Q4. Cable never stood a chance, unlike Gilts which are in demand this morning. This will certainly put Finance Minster Osborne austerity drive in the firing line. Critics believe that his aggressive tax hikes and spending cuts can only simply strangle growth. The BoE was already signaling that the UK was probably in a recession. To date, they have been promoting that the economy is healthier than data suggests. The market knows that there is room for revisions to the numbers given that they are early estimates. However, will they be large enough to make the double dip go away? The BoE may not be able to look through the numbers and may have to respond with QE.

Will a change of guard be about faith in the EUR project? The Dutch freedom party believes that the September election would be a referendum about sovereignty and Europe. Sarkozy is certainly under pressure and possible to be ditched by France in favor of Hollande, who has irked Merkel, and who herself faces the electorate next year. With the Irish referendum and the Greek going to polls around the corner, collectively these elections will be seen as a vote on the EUR project.

lol lol lol you are funny. At this moment in time i cannot show any pictures due to the fact that i still do body guard work and security could be compromised if you know what i mean. i got body like a greek god before the tumble lol . i see g/u and e/u are trading opposite direction at present i wonder when the switch will happen. i wont be trading for many hours yet as my charts are not showing anything. Whats this i see about butterflies lol i see stick insects and badgers lol. Take care

lol

Seriouslly how to build that kind of body ?

Hi Miza! What do you think about audusd?

Lemme Guess on the GU Next Direction
'Falling Three Method" on Hourly

i body guard sometimes as in looking after people (celebs) (rich) (politicians) but i spend time in gym. You need to do the right training that suits you, actually its like trading, trade your own style and not too much and not too little as you get out of rhythm

Britain sinks into double-dip recession. The U.K. has slid back into recession for the second time since the financial crisis after Q1 GDP unexpectedly fell a preliminary 0.2% on a quarterly basis following a fall of 0.3% in Q4. Markit's Chris Williamson, quoted in the FT, says the "underlying strength of the economy is probably much more robust," but that the data will hit confidence and send the U.K. back into a real recession. Opinion: Is there value in European equity ETFs?
Tucci having too much fun to leave EMC. Following a request from his team, Joseph Tucci will remain as EMC's (EMC) CEO indefinitely despite having planned to retire in December, he tells the WSJ. Tucci, who will turn 65 in August, also reveals that after the RSA security breach, EMC lost less than ten clients. "Our customers felt we handled it right," Tucci says. Earnings call transcript: Joe Tucci discusses the company's outlook.
Top Equities News
Eli Lilly profit falls but beats expectations. Eli Lilly's (LLY) Q1 EPS fell to $0.92 from $1.24 and revenue slipped 4.1% to $5.6B, although earnings exceeded consensus. Revenue from the company's cymbalta depression drug increased 23% on strong U.S. and international growth, while China remained the firm's fastest-growing market overall. Eli Lilly raised its EPS guidance for the full year to $3.15-$3.30. Earnings report: Lilly reports solid start to the year.
Human Genome mulls selling itself. Human Genome Sciences (HGSI) is reviewing its strategic options, including a possible sale, the company said yesterday after having rejected a $2.6B bid from Glaxo last week. Human Genome is probably hoping for a price in the high teens compared with Glaxo's $13-a-share offer, although analysts are skeptical, MarketWatch has reported. Opinion: Analyzing HGSI's path to a sale.
US Airways works to win more creditor support for AMR bid. US Airways (LCC) is trying to win backing from more of AMR's (AAMRQ.PK) unsecured creditors for a merger between the carriers, Bloomberg reports. Having last week received support from AMR's three major unions, which serve on its unsecured creditors committee, US needs two more members for a majority. Opinion: Volatility and weak economy plague airlines.
Wind-power ops hit Siemens earnings. Siemens' (SI) Q2 net profit slumped 67% to €1.05B and missed forecasts even though revenue grew 9% to €19.3B and beat consenus. The congolmerate was hit by a series of write-downs on a major offshore wind-power project, for which it couldn't rule out further losses, and at its joint venture with Nokia (NOK), for which it took a €640M charge. Siemens therefore lowered its FY profit guidance. Opinion: Offshore wind investment opportunities.
Banks scramble to prevent ratings cuts. With five major banks facing potential downgrades from Moody's - and $22B in extra costs - CEOs are pushing back against the ratings agency with an aggressiveness not seen since before the financial crisis, the WSJ reports. Sources say Brian Moynihan (BAC) and Vikram Pandit (C) have even argued against the downgrades in person. Opinion: Goldman is the strongest and cheapest.
Major debt loss hurts Credit Suisse's profit. Credit Suisse's (CS) Q1 net profit came in at 44M Swiss francs ($48M), much better than the 436M franc loss expected by analysts but a far cry from the 1.13B franc net profit in the year-earlier period. The results were hit by a 1.55B franc accounting loss on the bank's own credit and by 534M francs in bonuses; stripped of one-time items, Credit Suisse's Q1 profit was 1.355B francs. Opinion: Take a prosperous ride on the banking sector.
Nomura profit figures leaked. Nomura (NMR) will disclose that its FQ4 net profit jumped 51% to ¥18B ($221M) when it releases its results on Friday, Bloomberg reports in what appears to be a rather stunning leak. Analysts are expecting a net profit of ¥14.4B. The improved income was due to gains from trading outweighing a fall in investment banking.
AIG accuses former exec of industrial espionage. AIG (AIG) has sued Steven Udvar-Hazy, accusing the co-founder and former CEO of its ILFC aircraft-leasing business of stealing trade secrets and other confidential information for a rival company he now runs. AIG is seeking damages of at least several hundred million dollars. Opinion: AIG - undervalued and misunderstood
InterDigital puts its IP back on the block. InterDigital (IDCC), which soared last summer after putting itself up for sale and then crashed after finding no buyers, is exploring a sale of its 3G/4G patents, according to dealReporter. This time around, InterDigital is said to have split its portfolio into bundles to draw more buyers, and is "less ambitious on valuation." The company is "late into the first round of bidding." Opinion: 6 stocks poised to ride the LTE wave.
FAA concerned about 757 windshields. The FAA has proposed more frequent and detailed inspections of suspect windshields on over 600 Boeing (BA) 757 airliners following years of safety concerns. Regulators in other countries are likely to follow suit, affecting around 300 additional 757s. Opinion: Capture a profit on Boeing's slowdown.
Top Economic & Other News
TARP debt falls but small banks suffering. The amount still owed to TARP has fallen to $119B from $133B in January, the program's special inspector general, Christy Romero, said in her quarterly report. However, 351 small banks that have $15B in loans face a "significant challenge" in raising new funds to repay the government. It's a trend that weakens the Treasury's positive spin on TARP. Opinion: Banks continue to move into the future.
Fall in China's forex reserves may indicate yuan move. China's foreign-currency reserve dropped in March by $4.69B to $3.305T, the first monthly contraction since December. The trend may signal that officials are planning to step up their efforts to suppress the yuan's value, Credit Agricole CIB analyst Dariusz Kowalczyk tells MarketWatch. Opinion: Pimco to launch global TIPS ETF.

Today's Markets:
In Asia, Japan +1.0%. Hong Kong -0.1%. China +0.8%. India -0.3%.
In Europe, at midday, London +0.2%. Paris +1.9%. Frankfurt +1.3%.
Futures at 7:00: Dow +0.5%. S&P +0.7%. Nasdaq +2%. Crude +0.45% to $104.02. Gold -0.15% to $1641.30.

Today's economic calendar:
7:00 MBA Mortgage Applications
8:30 Durable Goods
10:30 EIA Petroleum Inventories
11:30 Results of $35B, 5-Year Note Auction
12:30 PM FOMC Announcement
2:00 PM FOMC Forecast
2:15 PM Bernanke Press Conference