EurAnalysis

Get some good rest. I want to hear about your views and trades/potential trades you may take if you don't mind sharing later.

Goodnight buddy.






Fake TL break.

http://news.goldseek.com/EuroCapital/1347653400.php


http://news.goldseek.com/EuroCapital/peter.PNG Operation Screw

By: Peter Schiff

Snippet:

With yesterday's Fed decision and press conference, Chairman Ben Bernanke finally and decisively laid his cards on the table. And confirming what I have been saying for many years, all he was holding was more of the same snake oil and bluster. Going further than he has ever gone before, he made it clear that he will be permanently binding the American economy to a losing strategy. As a result, September 13, 2012 may one day be regarded as the day America finally threw in the economic towel.


Here is the outline of the Fed's plan: buy hundreds of billions of home mortgages annually in order to push down mortgage rates and push up home prices, thereby encouraging people to build and buy homes and spend the extracted equity on consumer goods. Furthermore, the Fed hopes that ultra-cheap money will push up stock prices so that Wall Street and stock investors feel wealthier and begin to spend more freely. He won't admit this directly, but rather than building an economy on increased productivity, production, and wealth accumulation, he is trying to build one on confidence, increased leverage, and rising asset prices. In other words, the Fed prefers the illusion of growth to the restructuring needed to allow for real growth.


The problem that went unnoticed by the reporters at the Fed's press conference (and those who have written about it subsequently) is that we already tried this strategy and it ended in disaster. Loose monetary policy created the housing and stock bubbles of the last decade, the bursting of which almost blew up the economy. Apparently for Bernanke and his cohorts, almost isn't good enough. They are coming back to finish the job. But this time, they are packing weaponry of a much higher caliber. Not only are they pushing mortgage rates down to historical lows but now they are buying all the loans!

Conclusions:

Fortunately, the crude limitations of the Fed's only policy tool have become more apparent to the markets. If you must stick with the nautical metaphors, QE3 has sunk before it has even left port. The move was explicitly designed to push down long-term interest rates, but interest rates spiked significantly in the immediate aftermath of the announcement. Traders realize that an open-ended commitment to buying bonds means that inflation and dollar weakness will likely destroy any nominal gains in the bonds themselves. To underscore this point, the Fed announcement also caused a sharp selloff in Treasuries and the dollar and a strong rally in commodities, especially precious metals.


Given that 30-year fixed mortgages are already at historic lows, there can be little confidence that the new plan will succeed in pushing them much lower, especially given the upward spike that occurred in the immediate aftermath of the announcement. Instead, Bernanke is likely trying to provide the confidence home owners need to exchange fixed-rate mortgages for lower adjustable rate loans - which would free up more cash for current consumer spending. He is looking for homeowners to do their own twist. If he succeeds, more homeowners will be vulnerable to increasing rates, which will further limit the Fed's future ability to increase rates to fight rising prices.


The goal of the plan is to create consumer purchasing power by raising home and stock prices. No one seems to be considering the likelihood that unending QE will fail to lift bond, stock, or home prices, but will instead bleed straight through to higher prices for food, energy, and other consumer staples. If that occurs, consumers will have less purchasing power as a result of Bernanke's efforts, not more.


The Fed decision comes at the same time as the situation in Europe is finally moving out of urgent crisis mode. While I do not think the ECB's decision to underwrite more sovereign debt from troubled EU members will work out well in the long term, at least those moves have come with some German strings attached [For more on this, see John Browne's article from earlier this week]. As a result, I feel that the attention of currency traders may now shift to the poor fundamentals of the US dollar, rather than the potential for a breakup of the euro.


In the meantime, the implications for American investors should be clear.

The Fed will try to conjure a recovery on the backs of currency debasement. It will not stop or alter from this course. If the economy fails to respond to the drugs, Bernanke will simply up the dosage. In fact, he is so convinced we will remain dependent on quantitative easing that he explicitly said he won't turn off the spigots even if things noticeably improve. In other words, the dollar is screwed.


Peter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital, best-selling author and host of syndicated Peter Schiff Show.


And Now Over To Europe and Germany !!!


Germany Extracts Stealth Victory Over the ECB

September 11, 2012 - 4:14pm — europac admin

By:

John Browne



Tuesday, September 11, 2012



Last week the European Central Bank (ECB) announced what many around the world had hoped it would: A plan that would allow the Bank to “do all it takes” to support the euro. Not surprisingly, stock markets in the EU and U.S. rose strongly based on the feeling that the ECB has now joined the Fed in a massive drive to reflate their respective economies by means of money creation. Many mainline observers and commentators heralded the new ECB position as a fundamental defeat for the Bundesbank, Germany’s central bank and a strong believer in sound money. Reality, however, appears to be a little different.

The deal actually contains many concessions to the German point of view. Perhaps the most important of these was the dropping of the ECB’s previous aim to ‘cap’ the bond yields of Eurozone members. Instead, the previously openended ‘buyer of last resort’ commitment, to keep bond yields low of troubled Eurozone member nations, was replaced by greater selectivity and far stricter conditions—German style. There were other major concessions as well.

 

1. First, any Eurozone member nation that seeks ECB support for its bonds in the secondary market will have to make a formal application. Naturally, such a public application will likely come with political costs, embarrassment and even stigma. Given that asset prices, for stocks and bonds for instance, are so influenced by perception, these pressures will dissuade many member states from going down this road.
2. Second, any applicant country will have to agree to Germanic-style deficit reduction and economic restructuring programs,which likely come with huge political costs and short term economic pain.
3. Third, ECB secondary market support will be granted only if the somewhat underfunded European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM) commit their funds in parallel. The Bundesbank has long held that the ECB should not be permitted to abuse its power to create synthetic money without spreading the cost to the rest of Europe and internationally, via the IMF.
4. Fourth, the ECB’s support is limited to bonds with a maximum of three-year maturities. Eurozone members in trouble will never overcome their excessive debt problems by solely borrowing short-term.
5. Finally, all ECB bond purchases will be executed exclusively in the secondary market, thereby achieving the German aim to preserve the ECB that forbids direct financing of any Eurozone member by other members.

While many have surmised that Germany has yielded to the easy money Keynesian demands of its fellow members, it appears that she has been singularly successful at imposing its financial will on the rest of the Eurozone.

The significant concessions Germany received have gone largely unreported in the mainline media. Far from offering an instant reprieve to the debtor countries of the Eurozone, the new package will make German-inspired austerity more likely. This would therefore make continued recession for Europe as a whole more likely, at least in the short term. This, in turn, will make central banks both in Europe and the America’s more likely to continue to flood their economies with synthetic money. This should be good news for precious metal investors.

Economic weakness that persists in Europe may in turn encourage European politicians and even voting populations to accept ever greater German political control in return for what will be seen increasingly as direct ‘survival’ funding from Germany. The main short-term implication of Germany’s success is likely continued recession as austerity takes its toll. The long term results of greater German control of the Continent are much harder to predict.

Any investor trying to understand the political, economic and financial machinations of the Eurozone and the European Union would be well advised to focus on German actions, often hidden under pronouncements by the ECB. Most often the positions and actions that really matter are overlooked completely in the mainline media.


http://www.europac.net/images/by-nc-nd.jpgThis work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License. Please feel free to repost with proper attribution and all links included.

http://www.zerohedge.com/news/marc-f...-destroy-world

Snippet:

"Everything will collapse" is the consequence Gloom, Boom, & Doom's Marc Faber sees from the Fed's latest 'stimulus' (and the fallacy and misconception of how money-printing can help employment). In a wondrously clarifying interview on Bloomberg TV this morning, Faber explained why he was 'happy', since "the asset values of his holdings will go up" but as a responsible citizen he is worried because "the monetary policies of the US will destroy the world." It truly is class warfare under a veil of 'its good for you' as he notes: "the fallacy of monetary policy in the U.S. is to believe this money will go to the man on the street. It won't. It goes to the Mayfair economy of the well-to-do people and boosts asset prices of Warhols." Congratulations, Mr. Bernanke.

Must-watch (or read the transcript) - it is truly remarkable.

http://bloom.bg/PhXCyt





Faber on more Federal Reserve stimulus:

“It is difficult to tell what will happen. I happen to believe that eventually we will have a systemic crisis and everything will collapse. But the question is really between here and then. Will everything collapse with Dow Jones 20,000 or 50,000 or 10 million? Mr. Bernanke is a money printer and, believe me, if Mr. Romney wins the election the next Fed chairman will also be a money printer. And so it will go on. The Europeans will print money. The Chinese will print money. Everybody will print money and the purchasing power of paper money will go down. And I don't like bonds. I don't particularly like equities, but I think equities are a better space to be in than bonds.”

On what he will do with his portfolio in reaction to yesterday’s move:

“I own corporate bonds and I recently, as I wrote, I pulled some bonds from Kazakhstan because Kazakhstan economically is a much sounder country than the United States or any European country. But it is in small doses. I wouldn't put all of my money in corporate bonds. They have an equity character. I also own equities still in Asia and as I pointed out already four months ago for the first time in my life I bought equities in Portugal, Spain, Italy and France because they were unbelievably distressed. I think what people overlook today is they look at markets but they don't look at what happens within the market. In the last 12 to 18 months the U.S. has massively outperformed European markets, Asian markets with a few exceptions and now some markets are relatively depressed. I could argue the Chinese stock market is now relatively depressed. So the asset allocators may move some money in Chinese stocks and then they can rally 10% to 20%.”


“The fallacy of monetary policy in the U.S. is to believe this money will go to the man on the street. It won't. It goes to the Mayfair economy of the well-to-do people and boosts asset prices of Warhols…Very happy. Very good for the Fed. Congratulations, Mr. Bernanke. I’m happy. My asset values go up but as a responsible citizen I have to say the monetary policies of the U.S. will destroy the world.”

And Now Some Ron Paul...

http://www.zerohedge.com/contributed...ops+to+zero%29

The Rain In Spain...

Snippet:

As I’ve outlined in earlier articles, Spain will be the straw that breaks the EU’s back. The country’s private Debt to GDP is above 300%. Spanish banks are loaded with toxic debts courtesy of a housing bubble that makes the US’s look like a small bump in comparison. And the Spanish government is bankrupt as well.


Indeed, in the last month alone we’ve seen:

 

1. Spain’s banking system saw a bank run to the tune of €70 billion in August. The market cap for all of Spain’s banks is just €114 billion. So Spanish banks need to raise at least €20+ billion or so per month in the coming months to stay afloat. This is without depositors pulling additional funds in September onwards. That’s really bad news.

1. Spain’s now nationalized Bankia just took another €5.4 billion from Spain’s in-country rescue fund. This indicates that once nationalized, problem banks DO NOT cease to be problems.

1. The region of Andalusia is requesting a bailout from the Spanish Federal Government. This comes on the heels of bailout requests from the regions of Valencia, Murcia and Catalonia (none of which want any “conditions” on the funds).

1. Spain has set aside €18 billion to bailout its regions. The current bailout requests already amount to €10.8 billion. That’s just from this year alone.

If you need more info on Spain, the bullet items from them that you need to know are that:

 

1. A huge portion of Spain’s banking system (representing over 50% of mortgage loans AND deposits) was totally unregulated up until just a few years ago.

1. Spanish banks were drawing €337 billion from the ECB on a monthly basis to fund their liquidity needs.

1. Every political figure and bank in Spain is HIGHLY incentivized to lie about the true nature of the Spanish banking system (a private text message from the Prime Minister claimed the REAL capital needs were closer to €500 billion… which is assuming he knows what he’s talking about/ the banks were honest with him… which I HIGHLY doubt).

Indeed, the markets are beginning to figure out the Spain is DONE regardless of what the ECB does. The truth is that Spain is in as bad a shape as Greece if not worse. Expect things to get very, very ugly soon.

The reason is two fold:

 

1. Spanish banks need to roll over (meaning renew terms on) more than 20% of their bonds this year.
2. Spanish sovereign bonds are collateral for hundreds of billions of Euros’ worth of trades.

With Spanish banks already under severe funding stress (again, they drew €337 billion from the ECB before the new OMT program… and depositors took €70 billion out of the system last month), they’re in no position to start paying out higher interest payments to bondholders.


And with investors realizing that Spain’s banks are all lying about the state of their balance sheets (remember, Bankia was talking about paying a dividend just one month before it collapsed and revised its €41 million 2011 profit to a €3.3 billion LOSS), we’re going to be seeing plenty of bank failures this year.

Good Monday morning fellow traders

I spent a considerable number of hours on the weekend looking at how to best position myself in the markets going forward. I cannot say it's been easy. Ben Bernanke's QE Infinity has certainly made minced meat of the bears that remained after Mario Draghi's ECB Bond buy plan and the German Constitutional court's decision to allow ratification of the ESM and fiscal treaties.

Looking at those 3 major risk events concluding on a market positive note, I was initially inclined to believe that market risk has significantly diminished and the market will trade accordingly. However, after some more thought, I was no longer that sure what I should believe.

Here are my considerations...

The Equity indices are pretty much at a 5 year high right now which was mostly helped by the front run rally we saw over the last several weeks. Since June 2012, the SP 500 index has rallied from 1265 to a high of 1475. That's an increase of approx 17% in slightly over 3 months which we are testing new highs. How can this possibly be sustainable when since the last time the SP500 was at these heights, we did not have such a macro economic mess on our hands. Thank about the following for a minute...

- Unemployment numbers are higher everywhere
- Inflation weighted GDP growth is non existent
- The US Government is facing a dangerous fiscal cliff issue.
- The Eurozone is in or just entering a deep recession
- The Euro debt crisis still has no sustainable solution.
- China's growth keeps contracting without end in sight.
- Debt to GDP ratios across the world are soaring.
- QE1, QE2 and Operation Twist have done nothing to fix the economy.
- Civil unrest and Middle Eastern instability are front and center.

Therefore, I have little to no confidence in this risk rally. Something has to give at some point and I fear that many hopiumized bulls are going to get pinched. I certainly don't want to be one of them.

I think it will be a slow day today while the market digests the same data I went through over the weekend. I will be looking forward to hearing what most economists have to say about this situation. Until then, I have my coffee and I'm sitting back in my comfy chair waiting for the US Dollar to gain back some of its recent losses before the next attempt to drive the markets higher, which will surly fall short of expectations... in my opinion.

Best of luck and trade safe.

E/U Weekly

Today’s orderboard

Written by Pete Jackson
September 17, 2012 at 06:18 GMT

EUR/USD: Offers 1.3140/50, more 1.3160/70 (1.3169- 38.2% retracement of the May 2011- July 2012 fall and Friday’s high) likely buy stops above ahead of more offers in front of a possible barrier at 1.3200. Bids 1.3100/10 and 1.3080/90, sell stops through 1.3075 ahead of more bids 1.3020/30

GBP/USD: Bids 1.6215/25, 1.6185/95, larger down at 1.6145/55. Offers 1.6245/55 and 1.6290/00 (barrier?) buy stops above.

EUR/GBP: Bids 0.8070/75, and 0.8050/55, sell stops through 0.8050. Offers 0.8105/15 likely buy stops above (Friday high 0.8114) ahead of stronger tech res 0.8155/65 (June 15/10 highs) and 79.25/35 (200 day MA 79.31)

USD/JPY: Bids 78.00/10 (semi-official importers) some small sell stops below ahead of more bids 77.70/80. Offers /tech res 78.50/70 (78.66 cloud base, 55 day MA 78.69) and 78.90/10 (100 day MA 79.07)

EUR/JPY: Bids 10250/60 and 102.00/10, sell stops below ahead of tech supp 200 day MA at 101.77. Offers 102.90/10 and 103.25/35 (May 14 high 103.31)

AUD/JPY: Bids 82.20/30 and more bids /tech 81.850/95 (200 day MA 81.86, cloud top 81.93), more tech supp at 55 day MA- 81.72. Offers 82.80/00 and 83.50/60.

EUR/CHF: Offers 1.2170/80, tech res 1.2195/00, possible buy stops above .Bids 1.2090/00 and 1.2140/50 and 1.2080/90

AUD/USD: Bids 1.0520 down to 1.0500. Sell stops below through 1.0495 ahead of real money bids 1.0450/70. Offers 1.0560/70 and 1.0590/00

EUR/AUD: Offers 1.2490/00 (barrier talk 1.2500) buy stops above ahead of tech res 1.2520/30 (June 22 high 1.2528). Bids 1.2425/35 and 1.2400/10, possible sell stops below

Today’s option expiries

Written by Pete Jackson
September 17, 2012 at 04:56 GMT

For the 1000NY/1400GMT cut

EUR/USD: 1.3000, 1.3050, 1.3110,, 1.3120

USD/JPY: 77.50, 77.65, 78.00, 78.65, 79.00

EUR/GBP: 0.7990

AUD/USD: 1.0550, 1.0600, 1.0650

A bit of a mixed bag this morning, but leaning towards risk-off sentiment.

Morning.

T

playin a little intraday stuff... seeing if we can challenge the 3073...

visual.... PA was "toppy" all asia... just gonna trail it down on each subsequent channel break/retest

I have a timeserie from 1992. That is the day when ecu started to work as interbank currency. It was predecessor of Euro, and was only electronic.

Could you please tell me what currency basket have you used pre 1992? Same as ecu? And if you will be so kind, could post me the timeserie here(*.csv, *.txt, *.whatever)?

I would be very glad,

Thx,

T

Pre Historic Data is not valid for any Data Analysis.

Not much to say today. AUD/USD is worth watching, Trade disputes between China and Japan appear in the offing resulting from territorial frictions.
These will be political in origin and if enacted will be market movers.
Japan relies heavily upon the labor force of China and China needs the trade secrets of Japan to provide employment and continuity for China's elites.
A breakdown in this up till now symbiotic relationship is risk averse in outcome.

EURO/USD weak against weak so no trade for now.

I am producing delivery service of cash. I dont feel like a speculator, just evolution of capitalism. Trader 2012.

T

During this weekend I was speaking with a trader. He explains me that most of investor know that US macroeconomic outlook is not very well, but they are really scared about the EZ macroeconomic outlook.
They only wants some investment products based in US/USD even if they know that's risky. I think the fact that SP reaches the hight from 4 years ago is not based on the fact that investors believe in their investments, but only that they don't know what to do with their amout of money (Thanks to QE1, QE2 and QE3) and prefer to invest in US because it seem to be less risky (for the moment..).
I'm expecting Spain asking for help in September.
Good trades & be carefull

PA is being very well behaved at least...

support set/fake break/ pull back/ break with momentum/ close... wash rinse repeat....

oops there goes the 3100

movin stops up

Piptrapper

Like yourself I was looking for the explanation that best suited the new situation created by the FED.

Your technical skills surpass mine however we share much in common on the understandings on the fundamental side of the markets.

When I read the following that you posted a few hours ago I recalled that Lance Roberts made the same point. His explanation included charts of the SPX long term along with an excellent fundamental explanation of where and how the money will flow this time. I had posted this link yesterday and I am not sure if you saw or read it.

I would suggest that you give it a careful read and give some thought to the scenario laid out by Lance Roberts of the X Factor now one of my favorite analysts. For everyone else here I would highly recommend this article is a must read and the best review that I have seen to date.

Jim Willie is scheduled to come out with his analysis on September 19, 2012 and I will look forward to his views on the latest moves by the ECB and the FED.

Have a good trading week everyone.









[PDF] QE3 – The Rules Have Changed

www.streettalklive.com/newsletter.html?...242%3Aqe3-the-rules-hav...
You +1'd this publicly.
File Format: PDF/Adobe Acrobat

1 day ago – QE3 – The Rules Have Changed. I was wrong. Last Thursday Bernanke announced not just another balance sheet expansion program but one ...

P.S. My Original Post...

http://www.forexfactory.com/showthread.php?p=6015900

I think this is valid point.

T

1.3100 broke too easily, so find myself short EURO/USD
4 hr charts still remain wildly overbought
we will see, what we will see.