EurAnalysis | Page 3146 | Forex Factory

Options

Go to
Permalinks
Print Thread

Related Instruments

EUR/USD

Similar Threads

EurAnalysis Kindergarten 24 replies

Attachments: EurAnalysis
Exit Attachments

EurAnalysis

  • #62,901
  • Dec 12, 2012 5:00am Dec 12, 2012 5:00am
Good day, Everybody.

Anyone have any idea what happened to MGino?
  • #62,902
  • Dec 12, 2012 5:01am Dec 12, 2012 5:01am
Quoting AaronWard
My thinking exactly. Except that I would probably string it out for as long as I could. Which in this case should be about 4-5 months. Which if you think about it, is exactly what he has done on previous occasions.

yeah, but keep in mind that if there's anything Ben does best it's surprising the markets.
Attached Image (click to enlarge)
Click to Enlarge Name: surprise.jpg Size: 78 KB
  • #62,903
  • Dec 12, 2012 5:04am Dec 12, 2012 5:04am
Quoting PipTrapper
...at the risk of putting the Fed's credibility in question.

Consider that:
1. The Fed's mandate is inflation at or below 2% and maximum employment in a context of price stability. (Inflation is key)
2. QE3 was less effective than QE2 which was less effective than QE1. How effective would QE4 be other than preventing the markets from going through a necessary correction? Without a healthy market correction, everyone will hold off in anticipation of it.
3. The equity markets are not reflecting the real economy = bubble.
4. The extra liquidity...
The success or failure of QE is requires setting criterion. As I see it, QE has done a number of things:

1. recapitalize the banks. With all the money that the fed has pumped in to the system, American banks are no longer in danger of anything except getting bloated.
2. fight deflation. Well, that is not happening now or any time soon.
3. make American goods more competitive by devaluing the dollar. it is a fight but it is clear that the Feds efforts are making a difference
4. hurt currency manipulators such as China with dangerously high inflation
Kill the ego, or it will kill the mission.
  • #62,904
  • Dec 12, 2012 5:06am Dec 12, 2012 5:06am
Quoting lumesh
yeah, but keep in mind that if there's anything Ben does best it's surprising the markets.
Which is one of the reasons he is the president of the fed.
Kill the ego, or it will kill the mission.
  • #62,905
  • Dec 12, 2012 5:07am Dec 12, 2012 5:07am
Not expecting big move, BIS might jump in again for whatever reason. But tight SL will not survive the whipsaw.
  • #62,906
  • Dec 12, 2012 5:10am Dec 12, 2012 5:10am
Quoting AaronWard
The success or failure of QE is requires setting criterion. As I see it, QE has done a number of things:

1. recapitalize the banks. With all the money that the fed has pumped in to the system, American banks are no longer in danger of anything except getting bloated.
2. fight deflation. Well, that is not happening now or any time soon.
3. make American goods more competitive by devaluing the dollar. it is a fight but it is clear that the Feds efforts are making a difference
4. hurt currency manipulators such as China with dangerously...
Sure... You're absolutely correct. It has certainly done all that, but it did it in QE1 and QE2 only. What did QE3 do and what will QE3.5/4.0 do?

ADD: The bar has been set very high now, so anything less than a net expansion of policy will see equities fall and USD rally.
Those who say it cannot be done should not interrupt those who are doing it
  • #62,907
  • Dec 12, 2012 5:16am Dec 12, 2012 5:16am
Quoting TraderChris
Good day, Everybody.

Anyone have any idea what happened to MGino?
He was suspended and many of his posts extracted. Could be criticizing other traders.
  • #62,908
  • Dec 12, 2012 5:19am Dec 12, 2012 5:19am
Quoting PipTrapper
Sure... You're absolutely correct. It has certainly done all that, but it did it in QE1 and QE2 only. What did QE3 do and what will QE3.5/4.0 do?

ADD: The bar has been set very high now, so anything less than a net expansion of policy will see equities fall and USD rally.
it knocked 500 pips off of the dollar in a matter of days so it absolutely worked there. Still no deflation so perhaps QE 3 is helping there. China is still suffering from inflation and is gradually moving their peg so it probably helped there too. Sucking up the MBS from the banks definitely made their balance sheets look better (although not necessary in my books).

Oh yeah, I forgot one of the important ones. It greatly reduces the cost of borrowing for the US government by creating an artificial demand for US bonds. Bonds are at historical lows and I am pretty sure that QE 3 is part of the reason.
Kill the ego, or it will kill the mission.
  • #62,909
  • Dec 12, 2012 5:20am Dec 12, 2012 5:20am
Quoting PipTrapper
Sure... You're absolutely correct. It has certainly done all that, but it did it in QE1 and QE2 only. What did QE3 do and what will QE3.5/4.0 do?

ADD: The bar has been set very high now, so anything less than a net expansion of policy will see equities fall and USD rally.
I hope.
Kill the ego, or it will kill the mission.
  • #62,910
  • Dec 12, 2012 5:25am Dec 12, 2012 5:25am
Quoting Ken A
He was suspended and many of his posts extracted. Could be criticizing other traders.
Nope. I checked his historical posts and there is no misbehavior at all. Also his extracted posts are his econometric reports.
Obviously somebody didn't like his reports for some reason. I have no clue why this has happened.
Hopefully he'll be back soon.
Those who say it cannot be done should not interrupt those who are doing it
  • #62,911
  • Dec 12, 2012 5:30am Dec 12, 2012 5:30am
Quoting PipTrapper
Nope. I checked his historical posts and there is no misbehavior at all. Also his extracted posts are his econometric reports.
Obviously somebody didn't like his reports for some reason. I have no clue why this has happened.
Hopefully he'll be back soon.
I saw his posts in EUR/USD and some disagreement with others as far as analysis goes. Not sure but hope he will make a comeback.
  • #62,912
  • Dec 12, 2012 5:33am Dec 12, 2012 5:33am
Quoting AaronWard
The success or failure of QE is requires setting criterion. As I see it, QE has done a number of things:

1. recapitalize the banks. With all the money that the fed has pumped in to the system, American banks are no longer in danger of anything except getting bloated.
Okay.

Quoting AaronWard
2. fight deflation. Well, that is not happening now or any time soon.
Given the current economic AND debt environment in the U.S. and in the whole world, would a deflation really be a bad thing ? Who's it gonna benefit when price increases run ahead of economic improvement ? We need to focus on how to improve our competitivness, productivity and the likes not just propping up the inflation artificially hoping that a stupid consumer would get frightened about the future price level and would go and buy a house with the money he doesn't have. "Yaayyy, housing market is picking up, things must be awesome". This policy is idiotic and not sustainable.

How in the hell can a QE be a positive sum for the economy in the end when AT SOME POINT in the future you need to withdraw that excess liquidity ? Especially in the belt-tightening environment which we are going to witness in the future through spending cuts etc. etc. ? When will we accept the lower levels of growth ??

To add, of course, the QE is going to benefit the economy...but only at the expense of increased balance sheet. So, all of the gain WILL be erased when the FED reverses course. Actually, IMHO, i doubt it will ever happen...that reversed course...At least not even close to the extent they have expanded. There's no way they can accept the interest rate on their debt, then.

Quoting AaronWard
3. make American goods more competitive by devaluing the dollar. it is a fight but it is clear that the Feds efforts are making a difference
Why not do the QE until dollar hits 2 per euro then ? A weaker currency means better competitiveness, doesn't it ? I'm sorry but i freaking hate that competitivness argument ...that's a big bunch of BS. A weaker currency comes at the expense of a stronger currency of your counterparty...tell me which of those couterparties will just looove a stronger currency in today's environment?? We already have a massive currency war going on started by the FED and the FED must put an end to it and accept a market price.
  • #62,913
  • Edited 6:13am Dec 12, 2012 5:56am | Edited 6:13am
Quoting lumesh
Given the current economic AND debt environment in the U.S. and in the whole world, would a deflation really be a bad thing ? Who's it gonna benefit when price increases run ahead of economic improvement ?
If the US has a 16 trillion dollar debt and the nominal GDP falls by 20% because of deflation while the real GDP remains constant, the effective debt is 25% greater AND the US has less money to pay back the debt because revenues have fallen. So deflation increases the real debt while simultaneously decreasing the ability to pay off this debt.

This is exactly like a guy with a 200K loan on a house that is now worth 150K and a salary cut by 20%. It is not a pretty picture. And it gets worse as further reductions in equity and salary are reasonable expectations.

Deflation also creates a huge liquidity trap which destroys the economy. If you wait six months what you want to buy is cheaper. If you invest your money in something real, it will be worth less in six months. Both the consuming and the investing segments of the economy have a very strong incentive not to invest or consume. The best investment for your money is to hide it under a rock which effectively removes it from the economy.

Further a deflationary cycle is perhaps the most crippling economic condition which can best an economy. People love to talk about the German hyperinflation not realizing that the subsequent deflationary cycle collapsed the German government and brought Hitler to power.

Quoting lumesh

How in the hell can a QE be a positive sum for the economy in the end when AT SOME POINT in the future you need to withdraw that excess liquidity ? Especially in the belt-tightening environment which we are going to witness in the future through spending cuts etc. etc. ? When will we accept the lower levels of growth ??
Who says they are ever going to withdraw the liquidity from the economy? They are not. Nor should they. Inflation is the lesser evil.

Quoting lumesh
Why not do the QE until dollar hits 2 per euro then ? A weaker currency means better competitiveness, doesn't it ? I'm sorry but i freaking hate that competitivness argument ...that's a big bunch of BS. A weaker currency comes at the expense of a stronger currency of your counterparty...tell me which of those couterparties will just looove a stronger currency in today's environment?? We already have a massive currency war going on started by the FED and the FED must put an end to it and accept a market price.
If they could get it to 2 per euro they would. However, as you say, it is a war. The other side(s) are fighting back. As for the currency war "started by the Fed" ... I am not sure who started it but I suspect it was the Asian economies desiring to sell cheaper goods to the US while creating barriers to US goods in their own domestic economies.
Kill the ego, or it will kill the mission.
  • #62,914
  • Dec 12, 2012 6:25am Dec 12, 2012 6:25am
Quoting AaronWard
... If they could get it to 2 per euro they would. However, as you say, it is a war. The other side(s) are fighting back. As for the currency war "started by the Fed" ... I am not sure who started it but I suspect it was the Asian economies desiring to sell cheaper goods to the US while creating barriers to US goods in their own domestic economies.
Let's not throw all the Asians in one basket. It was China... plain and simple.
Those who say it cannot be done should not interrupt those who are doing it
  • #62,915
  • Dec 12, 2012 6:27am Dec 12, 2012 6:27am
EUR/JPY breached 108.00. Should see 110.00 real soon.
  • #62,916
  • Dec 12, 2012 6:39am Dec 12, 2012 6:39am
Quoting Ken A
EUR/JPY breached 108.00. Should see 110.00 real soon.
Hi all

Ken, does it mean that EU shoud go 1.32** from your point of view?
  • #62,917
  • Dec 12, 2012 6:41am Dec 12, 2012 6:41am
Quoting magicgate
Hi all

Ken, does it mean that EU shoud go 1.32** from your point of view?
No, it doesn't have to be +1 correlated. But without bad news + FED, it just might.
  • #62,918
  • Dec 12, 2012 6:42am Dec 12, 2012 6:42am
thanks for your reply.

i had a whole new reply almost ready and i managed to close the FF window

later, if i have time i'll will write again

There are points i agree with and some points that need to be discussed further.


Quoting AaronWard
If the US has a 16 trillion dollar debt and the nominal GDP falls by 20% because of deflation while the real GDP remains constant, the effective debt is 25% greater AND the US has less money to pay back the debt because revenues have fallen. So deflation increases the real debt while simultaneously decreasing the ability to pay off this debt.

This is exactly like a guy with a 200K loan on a house that is now worth 150K and a salary cut by 20%. It is not a pretty picture. And it gets worse as further reductions in equity and salary are reasonable...
  • #62,919
  • Dec 12, 2012 6:42am Dec 12, 2012 6:42am
Quoting PipTrapper
Let's not throw all the Asians in one basket. It was China... plain and simple.
I'm not sure, but China came on the scene relatively lately and they were not a significant economic player until the last decade and a half. I think that currency manipulation predated them.

Having spent a lot of time in China, my personal opinion is that the primary concern with controlling the rate of exchange was not with selling more goods. It was isolating the Chinese economy from the destabilizing effect of currency fluctuations. Above all else the Chinese government wants stability.
Kill the ego, or it will kill the mission.
  • #62,920
  • Dec 12, 2012 6:44am Dec 12, 2012 6:44am
here a nice joke about engineer,physicist,and a economist.they find themselves shipwrecked on a desert island with nothing to eat but a sealed can of beans.how to get at them? The engineer proposes breaking the can open with a rock.the physicist suggests heating the can in sun,until it bursts.The economist's approach:''First,assume we have a can opener.....'' .
Allah has permitted trade and has forbidden interest [koran]
33 traders viewing now