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EurAnalysis Kindergarten 24 replies

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  • #53,881
  • Sep 11, 2012 5:38am Sep 11, 2012 5:38am
Got it. Who´s the man! Well, I know you dont care, but maybe PT cares . And I will have saved link here.

FED has currently opened swap operations with ECB standing at amount @ 17 Bn USD and is rerolled on weekly basis. Dunno if it is a lot or few, when compared to past, but thats what I am going to find out very soon.

T

http://www.newyorkfed.org/markets/fx...wap_recent.cfm
"I know one thing, that I know nothing." Sokrates
  • #53,882
  • Sep 11, 2012 5:38am Sep 11, 2012 5:38am
The German finance minister public pronouncements are also an indication that German Sovereignty will be upheld and not the wishes of the ECB governing council.

If someone else has a different take on what will transpire very shortly please post as zero hour does approach.
  • #53,883
  • Sep 11, 2012 5:38am Sep 11, 2012 5:38am
Quoting PipTrapper
It's all tracked at the NY Fed

http://www.newyorkfed.org/markets/fx...wap_recent.cfm
Damn
"I know one thing, that I know nothing." Sokrates
  • #53,884
  • Sep 11, 2012 5:41am Sep 11, 2012 5:41am
Quoting Tom_D_Trader
Damn
...and it started mid October

Attached Image (click to enlarge)
Click to Enlarge Name: FedECBswap.gif Size: 12 KB
Those who say it cannot be done should not interrupt those who are doing it
  • #53,885
  • Sep 11, 2012 5:52am Sep 11, 2012 5:52am
Quoting foto
The German finance minister public pronouncements are also an indication that German Sovereignty will be upheld and not the wishes of the ECB governing council.

If someone else has a different take on what will transpire very shortly please post as zero hour does approach.
I don't see how anyone can reasonably argue against that statement, so don't expect any contrary responses
Those who say it cannot be done should not interrupt those who are doing it
  • #53,886
  • Sep 11, 2012 6:04am Sep 11, 2012 6:04am
Quoting PipTrapper
I don't see how anyone can reasonably argue against that statement, so don't expect any contrary responses
I dont understand what are you talking about guys. You are saying Schauble said Germans cant be blackmailed, they are sovereign, and say FO ESM?

T
"I know one thing, that I know nothing." Sokrates
  • #53,887
  • Sep 11, 2012 6:09am Sep 11, 2012 6:09am
Tom, Schauble is offering no olive branches as in lets make a deal, we can work this out.
The German State will not take second place to the ECB governing council.

I suspect that the German Constitutional Court will not rewrite the German Constitution just to get along with the ECB governing council.

Brussels is nothing without the ECB. Money is the weapon to eliminate Nations borders not guns.

Add: why is Soros so upset with Germany? Soros believes in a single state of Europe. Germany believes in the German State.
  • #53,888
  • Sep 11, 2012 6:12am Sep 11, 2012 6:12am
Quoting sisse
Translating FA factors in good trading decision will give u a superb edge, knowing when and how to read news/reports and FA in general can be the key point between a successful swing trader or a failure...however, trying to rationalise and explain every single micro or natural Ebb and flow in the market with FA reasons is not only wrong but impossible...

That's what I call the "analyst syndrome" in which you may expend 99% of time trying to explain why the next move will happen while 99% of that next move is already happenning(ed).......
Once we form a opinion based on knowing the fundamentals then we start to lock in our opinion and we start to ignore changing factors. A good balance is very important.

I never fall in love with my point of view and by looking at opinions on both sides of the same issue, can get a better sense of reality.

Then because of all the misinformation sometimes PERCEPTION trumps fundamentals.

A perfect example of that was the NFP of 96,000 on Friday past.

I was surprised. Now the market has HIGH EXPECTATIONS for the FOMC and more QE.

That leads me into my copyand paste from Graham Summers of Gains, Pains & Capital who usually makes good sense to me.

September 11, 2012

What's the Fed Going to Do?


Yesterday we worked through the illusion to the reality of the ECB's "unlimited" bond purchases, the end result being that we discovered the ECB:


1) Didn't announce anything new


2) Is implementing the same policies it's tried twice before with no success (see Greece)


3) Is implementing policies that neither Spain nor Italy will go for...

And finally...


4) Has solved nothing due to the fact that of the two mega-bailout funds, one has only €65 billion in firepower left and the other has yet to be ratified by Germany


Today we turn our attention to the US's Federal Reserve where the whole world expects the Fed to announce QE 3 at its FOMC meeting this Wednesday and Thursday.


There is a small problem of math with this. The Fed currently owns all but just $650 billion of the outstanding 10-30 year Treasuries. At this point, even a $200-300 billion QE program would create serious liquidity problems for the financial system. So scratch that idea off the list.


Of course, the Fed could potentially implement another agency/MBS QE program. But that would be a very political move with the Presidential election so close. This, combined with current food and energy prices, makes it unlikely the Fed would want to do this: too many consequences with too little to gain (stocks are at four year highs).


Indeed, if anything, the Fed is likely to pull a "ECB" move, namely promising something vague that it actually cannot deliver on. Why would the Fed do this? Because, like the ECB, the Fed is running out of bullets. Indeed, St Louis Fed President James Bullard all but admitted this to the Financial Times:


"I am a little - maybe more than a little bit - worried about the future of central banking," said James Bullard, president of the Federal Reserve Bank of St Louis, in a Financial Times interview at Jackson Hole. "We've constantly felt that there would be light at the end of the tunnel and there'd be an opportunity to normalise but it's not really happening so far."


The biggest worry on display at Jackson Hole was whether these bureaucrats, sitting at the heart of every mature economy, still have the power to influence demand now that interest rates cannot fall much further. Lurking behind many debates was this question: if central bank policies are so effective, why is the global economy not growing faster?

http://www.ft.com/intl/cms/s/0/a0e39...44feabdc0.html


Here's a Fed official, not only openly admitting that Fed policies aren't working, but even calling the future of Central Banking into question. Take note: underlying realities are beginning to be asserted by officials at Central Banks around the globe. They're running out of bullets.


So where does this leave us? Well, it's highly unlikely the Fed will actually implement anything major this week. What we could see is a large, but hollow promise for action, much like the ECB's promise of "unlimited" bond purchases based on certain "conditions" being met (an empty promise if ever there was one).


If this kind of empty promise is made, look for the market to top soon after.


And if the Fed fails to deliver this week... buckle up.


On that note, if you are not preparing for a bloodbath in the markets, now is the time to do so. The reality is that the Central Banks are fast losing their grip on the markets. They'll never admit this publicly, but I can assure you that Bernanke and pals are scared stiff by what's happening in the banking system right now.

CurrencyMan: Do Not Assume Anything. Wait and watch and be prepared and understand and then act if you understand why you are acting with a good Trade Plan, an exit stratgy and good risk management.

Enjoy the Fireworks tomorrow and Thursday. I am ready to short EUR/USD at the right time and over 1.2825 might change my view. There is more chance it will go backk towards 1.2600 than 1.2900 and NO CHART can tell me that.

Price action, money flow and new information, market perception all decide the direction.

I am ready for any scenario.

Good Day and Good Trading !!!
  • #53,889
  • Sep 11, 2012 6:17am Sep 11, 2012 6:17am
Quoting foto
PT
Currently short EURO/USD, GBP/USD, AUD/USD/
long USD/CAD

Looking to buy EURO/CAD at 1.2400 level where the 20 sma is, as that ma has acted as solid support on the dailies.

In a prior post had said would short EURO/USD on indications that Rajoy would either not participate or hold off on involving Spain in a bailout.
Last Thursday exuberance in equities is where I got in. Premptive on Rajoy with 20/20 hindsight. Also premature with this weeks events yet to play out, but so far no big enough adverse moves to cause an exit.
Where you see EUR/USD be when EUR/CAD @ 1.2400?
  • #53,890
  • Sep 11, 2012 6:17am Sep 11, 2012 6:17am
Quoting CurrencyMan
Once we form a opinion based on knowing the fundamentals then we start to lock in our opinion and we start to ignore changing factors. A good balance is very important.

I never fall in love with my point of view and by looking at opinions on both sides of the same issue, can get a better sense of reality.

Then because of all the misinformation sometimes PERCEPTION trumps fundamentals.

A perfect example of that was the NFP of 96,000 on Friday past.

I was surprised. Now the market has HIGH EXPECTATIONS for the FOMC and more QE....
Really really really interesting analysis, thanks for that ! (don't find a "thanks" button !)
  • #53,891
  • Sep 11, 2012 6:19am Sep 11, 2012 6:19am
Quoting foto
Tom, Schauble is offering no olive branches as in lets make a deal, we can work this out.
The German State will not take second place to the ECB governing council.

I suspect that the German Constitutional Court will not rewrite the German Constitution just to get along with the ECB governing council.
It is not that they need to rewrite consitution to get along with ECB. They need to rewrite it to prevent southern Europe from crash. It is nothing less, than huge move of solidarity from Germany. Needed to say, move under big pressure which is bad.

But imo it doesnt have much to do with bowing to ECB. In fact, the fact that Draghi announced that new bond buying program may sugest, that Europe could get along without German court approving. Read, if they dont approve, ECB will buy it anyway, possibly with help from FED QE and IMF. Imo the signal ECB is sending is: we dont need you Germans, but it would be much much better if you stayed in.

And if Schauble interprets it as Germany has to bow to ECB, well, thats just German pride biting. Pride which could send us very very low.

T
"I know one thing, that I know nothing." Sokrates
  • #53,892
  • Sep 11, 2012 6:19am Sep 11, 2012 6:19am
http://www.actionforex.com/action-in...0120911174024/

The FX markets continue to consolidate in tight range so far today. Asian equities are broadly lower following late selling in DOW and S&P 500 but selling pressure is so far mild. Euro stays firmly in tight range against dollar and yen and markets look beyond today at German Constitutional Court's ruling on the EUR 500b permanent bailout fund ESM tomorrow. The ruling is on a preliminary injunction, requested by a group of conservative German politicians, that could prevent the parliament from ratifying the treaty governing the ESM. The ruling is particularly important at this timing as troubled Eurozone countries are expected to tap into ESM for qualifying into ECB's Outright Monetary Transactions bond buying program. Markets are so far optimistic based on the fact that the court has granted the parliament powers on EFSF last year. Nonetheless, there are chances that the court could impose a veto power over ESM by Germany. And any strings attached to ESM would be seen as mildly negative.

In Greece, Prime Minister Antonis Samaras said that he failed to secure agreement from his coalition partners on 11.5B euro of fiscal reduction required by the EU/ IMF/ECB. The condition is for securing the next tranche of financial assistance from the troika. Finance Minister Yannis Stournaras said that the meeting with the troika "is a difficult discussion" although the government has been "trying to convince them on the soundness of our positions". Talks regarding bailout conditions raised concerns about the situation in Spain. Prime Minister Mariano Rajoy stated that he believes that bailout conditions would be reasonable and he would request for funding if he deems suitable for the country. Yet, Rajoy said that he "could not accept that they tell us which are the concrete policies in which we have to cut or not cut". For instance, Rajoy stated that pensions are the area cannot be reduced because "the pensioner is the most fragile person".

Another main focus of the week is FOMC meeting on Thursday. Markets would possibly remain cautious ahead of that too. We'd still believe that the current situation doesn't warrant immediate additional easing. In particular considering the ECB's OMT announce had already given financial markets a very strong boost last week. Nonetheless, markets have some hope that Fed will give more hints on when and what kind of additional easing would be implemented. Also, Fed would release new economic projections and might push the low rate pledge into 2015.

On the data front, UK RICS house price balance improved to -19 in August. Australia NAB business confidence deteriorated to -2 in August. Japan machine tools orders dropped -2.6% yoy in August. UK, Canada and US will release trade balance today while Canada will also release housing starts.
  • #53,893
  • Sep 11, 2012 6:20am Sep 11, 2012 6:20am
Quoting foto
.Add: why is Soros so upset with Germany? Soros believes in a single state of Europe. Germany believes in the German State.
That is true, unfortunately.
"I know one thing, that I know nothing." Sokrates
  • #53,894
  • Sep 11, 2012 6:32am Sep 11, 2012 6:32am
Quoting Tom_D_Trader
That is true, unfortunately.
soros bought euros thats why
Stocktwit: LuisCarlos - twitter: @lcparodi
  • #53,895
  • Sep 11, 2012 6:47am Sep 11, 2012 6:47am
KEN A
I am continually suprised by the strength of the Cad against the USD.
The durability of a trend in the face of global weakness runs and runs until one day there is a reality check. It already happened in the AUD which defied gravity on the basis of Central Bank policy money printing. So it made sense to me to say if the market recognizes that commodities were falling on lack of growth in Asia, that the Cad was not far behind.

Where do I see the EURO/USD when all is said and done? I think that in a little over two months that the pair will be sub 1.2500 and possibly approaching the 1.2000 level.

EURO/CAD I suspect may be right about where it is now as flight Capital will continue to offset the commodity weakness to come.

Predictions are easy to say, but not what I trade. I only look to get in where it appears opportune and stay on board as long as judgement tells me too. Everyday events change the cake mix and get revaluated as to impact. The only prediction that I call, is once in to give the trade enough breathing room to tell me to stay or go.
  • #53,896
  • Sep 11, 2012 6:50am Sep 11, 2012 6:50am
Quoting Luis Carlos
soros bought euros thats why
Sure he did . But I was more of refering to German stubborness. Those Prussians really cant imagine there may be Nation, who actually thinks differently. And who thinks differently, shall be terminated.

T
Attached Image
"I know one thing, that I know nothing." Sokrates
  • #53,897
  • Sep 11, 2012 6:53am Sep 11, 2012 6:53am
Quoting foto
KEN A
I am continually suprised by the strength of the Cad against the USD.
The durability of a trend in the face of global weakness runs and runs until
Next support at 0.9710
69
  • #53,898
  • Sep 11, 2012 7:04am Sep 11, 2012 7:04am
Tom,
Any government official is sworn in by taking an oath of office.
Government is organized by Laws. The body of a Nations Law is vast and reaches back centuries and longer. It is designed that way and a direct result of Nations cultural heritage.

We are in a time where populist culture which lasts no longer then the next sound bite is colliding with National heritage. I tend to believe that National heritage has some very powerful cards to show as decisions that mean something still flow from them.

I disagree it is only German pride. Germany reunified after being split between Soviet and the Western world is not going to roll over for Brussels. This is a Sovereign Nation who is successful because of a work ethic and industrial capacity. To blame the successful is common in populist culture, but in the end most people still want wealthy lifestyles.
The most liberal/socialists (Soros) do the Jet set thing, so they speak with the forked tongue.

It is a rare individual that forsakes money and pursues the spiritual as the highest value.

Markets are hardly rare in composition, but money will not trump the Country of its origin. Fatal mistake of the Central Bankers who only see through eyes of money and power.
  • #53,899
  • Sep 11, 2012 7:09am Sep 11, 2012 7:09am
Quoting foto
KEN A
I am continually suprised by the strength of the Cad against the USD.
The durability of a trend in the face of global weakness runs and runs until one day there is a reality check. It already happened in the AUD which defied gravity on the basis of Central Bank policy money printing. So it made sense to me to say if the market recognizes that commodities were falling on lack of growth in Asia, that the Cad was not far behind.

Where do I see the EURO/USD when all is said and done? I think that in a little over two months that the pair...
It's confusing for me to see the correlation these days. CAD remains strong even Crude drops, could be the capital flows as you said.
  • #53,900
  • Sep 11, 2012 7:17am Sep 11, 2012 7:17am
I wonder is Germany has a Justice Robertson on its court. Just make up $hit so power brokers can have their way.
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