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EurAnalysis Kindergarten 24 replies

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  • #57,001
  • Oct 1, 2012 12:04pm Oct 1, 2012 12:04pm
Quoting Thijs
Since QE3 price of oil decreased by +/- 8%.
and gold has been flat (in a small range)
and USD has been gaining
and Euro has been dropping

Perhaps QE3 is only preventing the markets from crashing and not actually making them rally.
Those who say it cannot be done should not interrupt those who are doing it
  • #57,002
  • Oct 1, 2012 12:05pm Oct 1, 2012 12:05pm
Quoting PipTrapper
Well, if you're right then we're heading into a period of massive hyperinflation. Better buy physical gold, chickens, goats and a nice plot of arable land where you can plant vegetables.

Oh I thnk they will control it for their benefit overall. Not necessarily the US's benefit. Inflation though is a variable to other values like the USD vs the EUR and others. I would agree if others did not try to tank their currency as well but they are except for a few like the SNB.
  • #57,003
  • Oct 1, 2012 12:05pm Oct 1, 2012 12:05pm
Another comment on risk on. Thursday the ECB is more likely to take further easing steps of some form as Mr Hollande and France are not all that healthy. May explain the big order level at the 1.2680 level so repeatedly. It may fail as resistance, but the Euro is not so rock steady for the Bulls to make it go up significantly from current levels.

Euro/Cad short into the ECB has potential
  • #57,004
  • Oct 1, 2012 12:05pm Oct 1, 2012 12:05pm
Quoting neuron
think DXY will go back to the 80.XX?
82.00 Wait for it.
Those who say it cannot be done should not interrupt those who are doing it
  • #57,005
  • Oct 1, 2012 12:07pm Oct 1, 2012 12:07pm
Quoting TRMZXT
Oh I thnk they will control it for their benefit overall. Not necessarily the US's benefit. Inflation though is a variable to other values like the USD vs the EUR and others. I would agree if others did not try to tank their currency as well but they are except for a few like the SNB.
The ECB has not printed a single Euro (yet). How do you explain that?
Those who say it cannot be done should not interrupt those who are doing it
  • #57,006
  • Oct 1, 2012 12:07pm Oct 1, 2012 12:07pm
Quoting PipTrapper
82.00 Wait for it.
http://3.bp.blogspot.com/-97PuzGLoxb...-a-picnic2.jpg
  • #57,007
  • Oct 1, 2012 12:10pm Oct 1, 2012 12:10pm
ECB has been busy beavers expanding the balance sheet. Mana from heaven is the source. How else can it be explained.

The movie "Arbitrage" with Richard Gere goes into the magic process of modern High finance. Now you see it, now you don't. Electronic money is just a click away from balanced books.

It is a good movie in any regards.
  • #57,008
  • Oct 1, 2012 12:11pm Oct 1, 2012 12:11pm
Quoting PipTrapper
82.00 Wait for it.
Attached Image
Those who say it cannot be done should not interrupt those who are doing it
  • #57,009
  • Oct 1, 2012 12:16pm Oct 1, 2012 12:16pm
Quoting PipTrapper
The ECB has not printed a single Euro (yet). How do you explain that?

They have but not at the scale of the BOJ or the Fed. You don't have to print money to devalue a currency or cause major issue from a monetary standpoint. Taking junk bonds and all that mess is a aspect of QE by the ECB as you know.
  • #57,010
  • Oct 1, 2012 12:16pm Oct 1, 2012 12:16pm
Quoting foto
ECB has been busy beavers expanding the balance sheet. Mana from heaven is the source. How else can it be explained.

The movie "Arbitrage" with Richard Gere goes into the magic process of modern High finance. Now you see it, now you don't. Electronic money is just a click away from balanced books.

It is a good movie in any regards.

yep
  • #57,011
  • Oct 1, 2012 12:18pm Oct 1, 2012 12:18pm
PA is hanging on the TL for long support twice. Come on!
  • #57,012
  • Oct 1, 2012 12:24pm Oct 1, 2012 12:24pm
Any idea about this pattern in M15?

Attached Image (click to enlarge)
Click to Enlarge Name: PA.png Size: 13 KB
  • #57,013
  • Oct 1, 2012 12:48pm Oct 1, 2012 12:48pm
Quoting rekon67
Any idea about this pattern in M15?

Attachment

not sure but if it is going down it is forming a HS most likely like I was talking about ealier but it might be a dislocated shoulder if it breaks down before US close. lol
  • #57,014
  • Oct 1, 2012 12:54pm Oct 1, 2012 12:54pm
Quoting TRMZXT
They have but not at the scale of the BOJ or the Fed. You don't have to print money to devalue a currency or cause major issue from a monetary standpoint. Taking junk bonds and all that mess is a aspect of QE by the ECB as you know.
Not quite. ECB has provided liquidity on collateral presented by the banks. They have not purchased the junk bonds. They have only exposed themselves to the risk, but ownership of the bonds remains with the private institutions that originally purchased them. So LTRO is not QE. In fact the effect of the LTRO programs was Euro positive because it averted a credit crunch (freeze) in interbank lending.

The only outright purchases the ECB have made so far were under the SMP program whereby they purchased approximately €250 billion in sovereign debt instruments and then sterilized those purchases through 1 week note auctions which they continue to do till this day, week after week.

The only QE that the ECB has participated in is in USD QE whereby the ECB has leveraged billions of US Dollars through the USD liquidity swaps set up with other central banks (including the Fed). Usage of those swaps inject more USDs into the market (not Euros) and then they USDs are exchanged into Euros, the result of which is Euro positive.

Despite all that (The US easing and the EZ not), the Euro has still fallen against the USD and that is a direct result of the underlying macro economic realities. Investors still prefer the USD and it will continue to be that way.

Now just imagine what will happen when the ECB does actually start easing through expanding its balance sheet with outright purchases of sovereign debt (or if/when the Fed stops easing). That's right... hello parity.
Those who say it cannot be done should not interrupt those who are doing it
  • #57,015
  • Oct 1, 2012 12:58pm Oct 1, 2012 12:58pm
In the US, Keynesian economics is bolstered by money printing, so who gets the title of biggest money printer gets the gold star. Whomever conjured up the name for it of "Quantative Easing" gets a beach condo of their choice anywhere in the world. It has made a lot of money for those in need.

Europe cannot use such a blatant contraption as it is politicaly unacceptable. So what the ECB is doing doesn't even have a name. Just mumbled nothings about money sterilization and such.

But in their hearts, and in the parlance of Central Bankers, they believe in Shakespear's words
"A Rose by any other name would smell as sweet"

On another matter, for those inclined, you may peruse todays USD/JPY pair and wonder how it holds the 78.00 level, while EURO/JPY has come down 40 pts off the High while the USD has been weakening since early morning. Must be the true blue free market i suppose.
  • #57,016
  • Oct 1, 2012 1:05pm Oct 1, 2012 1:05pm
Quoting PipTrapper
and gold has been flat (in a small range)
and USD has been gaining
and Euro has been dropping

Perhaps QE3 is only preventing the markets from crashing and not actually making them rally.
Damn. I wanted to do something similar
Inflation in things we need, Deflation in things we want.
  • #57,017
  • Oct 1, 2012 1:06pm Oct 1, 2012 1:06pm
PT your post of how the ECB provided liquidity without money printing. Isn't that just another way method to do what QE has done. It would seem to me it was a result more of the structural composition of the European Banking system which is not organized under one Central Bank as it is in the US.

Would submit that there is much to learn of creative accounting as practised by the Central Banks and how it is done is more a result of political neccessity rather then a differing outcome.

add: If there really is a difference then i have to rethink my approach. I have been treating it as much the same can of worms, no real difference to the markets between the ECB,FED,BOJ,BOE.PBOC, will exclude the SNB because they have gone over the cliff, but somehow have turned into airplane economics.

Thanx
  • #57,018
  • Oct 1, 2012 1:16pm Oct 1, 2012 1:16pm
Is XAU ready to fall, sitting on that 1763.50?
  • #57,019
  • Oct 1, 2012 1:21pm Oct 1, 2012 1:21pm
Quoting foto
PT your post of how the ECB provided liquidity without money printing. Isn't that just another way method to do what QE has done. It would seem to me it was a result more of the structural composition of the European Banking system which is not organized under one Central Bank as it is in the US.

Would submit that there is much to learn of creative accounting as practised by the Central Banks and how it is done is more a result of political necessity rather then a differing outcome.
Hi foto. Yes you are correct that in a way it is like easing because it provides the market with more liquidity. However, still it is only the provision of liquidity and does not debase the value of the currency, but rather only moves the capital around. The banks seeking the liquidity still have to have the collateral.

In the case of the Fed's QE, title to the capital is actually transferring hands and the banks are no longer exposed to that risk. This means that with the money they got, they can go out and purchase new instruments and then come back to the Fed with those unencumbered instruments to exchange them again for more liquidity.

The European banks cannot do that because the liquidity they receive in the first place is already encumbered. Furthermore, any outright purchases that the ECB did make and may make in the future under the OMT program, are and will continue to be sterilized. Therefore the Euro is not debased in any way.

In a nutshell $500 billion of purchases by the Fed has double the effect in easing ($1 Trillion), whereas with the ECB, €500 billion in liquidity is only €500 billion.

So, we can call it whatever we want, but at the end of the day, actual easing (and the normal effects on the currency thereof) is not happening in the EuroZone.
Those who say it cannot be done should not interrupt those who are doing it
  • #57,020
  • Oct 1, 2012 1:21pm Oct 1, 2012 1:21pm
Quoting Wulfgar
well Im still flatish.... dont really see a reversal pattern setting up... just some crappy consolidation...

Need a little more to get me to scale in.... I got my zones all setup(mini-scale in areas) from 2750-2816... just gotta get some catalysts and market timing for a move... maybe london will show me something

london showed me I should of held my longs and stayed awake...lol
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