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  • #7,741
  • Feb 13, 2013 8:18am Feb 13, 2013 8:18am
Quoting Mr. Scott
Sorry, but that is simply not true. A strong currency should be the result of a healthy economy and high gdp. (X-M) (exports - imports) is only one component of GDP.

Now, you might have countercyclical interference by central banks that results in the weakening of the currency as they artificially lower interest rates to stimulate aggregate demand. But in the long run, output is fixed and only the price level is impacted.

Historically, lower interest rates and declining currency would translate into stimulation of demand via lower interest...
  • #7,742
  • Feb 13, 2013 8:21am Feb 13, 2013 8:21am
Quoting venzen
I like your assessment and it is well argued.

I differ on the point of the results of current actions taken by cenbanks, though. A state of hyperinflation would require that there be more money in circulation than "things". As more and more money is printed (and debt created via e.g. cenbank loans or, say,speculation on margin), yes, the balance sheet of money in existence increases. This would ordinarily ramp up inflation - more money in the supply-and-demand arena leads to "things" becoming more expensive. However, the actions of cenbanks...


could not agree more about the deflation scenario


see here too:


Europe Is Not "Fixed": Two Charts


http://www.zerohedge.com/news/2013-0...xed-two-charts


..........Eurozone credit growth. Recall that debt-based, consumption-based economies like Europe, the U.S., China, Japan, et al. cannot expand without credit growth. Thus any decline of credit growth spells deflation:



This is not a debt crisis that is "fixed," this is a debt crisis waiting to implode. Total credit owed is still sky-high--only a trivial percentage of the debt has been written down or renounced.

Meanwhile, the credit growth needed to drive expanding consumption has literally fallen into the abyss.

This is the worst of all possible worlds in a debt-dependent economy: a massive overhang of impaired debt and a collapse in credit growth.

The only thing that's been "fixed" is the mainstream media's perception management propaganda. So is perception all there is to reality? The next six months should provide an answer.
  • #7,743
  • Feb 13, 2013 8:27am Feb 13, 2013 8:27am
Quoting Mr. Scott
My friend, not to get bogged down in esoteric debates about central bank policy.

But inflation is always and everywhere a monetary phenomenon. That means the only way for the central bank to remove excess supply is to raise interest rates. Problem is in a post-bubble economy, lower interest rates will not stimulate aggregate demand and the economy will not be able to heal. Money might flow from one place to another, but it must be removed or destroyed at some point. That can happen via a depression or more likely, via hyper inflation. Hyper...


There are three critical elements for inflation to occur:


a) central banks giving a lot of cheap money (check)

b) banks willing to give this money to companies and the people (failed)

c) companies and people in the right mood to take this money for consume (failed, see post before)



For a posterchild of this circumstances simply take a look at Japan over the last decades.
  • #7,744
  • Feb 13, 2013 8:41am Feb 13, 2013 8:41am
Quoting aristotel
I do not agree! (or I do?!?)

We were talking about reversals.

That 93% bulls sentiment index was screaming for a correction, not a reversal. (Not yet!)

With some media support, a few smart words from Bernanke and a new financial agreement in the name of marcb's ancestors we might reach 93.5% or 100%.

Also, we could very well stay above 1.35 for a month or more with fewer... bull sentiments.

As regards fundamentals and official statistics I have to consider them in order to grasp the "tricky" information from mainstreams.

In...

How can you be soooo mean?


Hahahah, good found, my friend. On May the 4th 2011 the sentiment index was then at 97%


Thanks again for pointing that out - I hadn't it on my mind :-)


Mood is a tricky thing - on Monday the sentiment index in EURUSD was down to 67% (after the big drop)



Do you expect the fake USD-Index move at the beginning of the deflation or simply with it?


I am asking, because I look for a global deflation with surging USD all along. That is founded on the belief, that most debt worldwide is denominated in USD. When this debt implodes, it will give strength to the remaining USD. Keep in mind: most debt comes in form of IOU's - so is not actually money, but would dilute the money at some point in time. But with imploding debt these IOU's have no chance to dilute the monetary base anymore.

Another factor is, that people generally try to deleverage in such a crisis. Therefore they will be in need for USD.


Both factors should give a long lasting strength to USD
  • #7,745
  • Feb 13, 2013 8:44am Feb 13, 2013 8:44am
What Can I Say Brother ! Awesome Call With Brilliant Analysis !
Quoting Luis Carlos
last month http://stks.co/q19f
  • #7,746
  • Feb 13, 2013 8:46am Feb 13, 2013 8:46am
Quoting venzen
I just want to take this opportunity to say: "To all the bulls, no hard feelings. Even though I worked hard at analysis and studied EWP, my short positions were continually taken out by you guys and the central banks, I am not angry. In fact, I am happy! - now I am going to take it all back!"

At least we hope so :-)


You know this tricky bastards - preached since 2010 to short the market and underestimated the effect of cheap money, and learned, that corrective waves can nearly creep forever (at least it feels alike)
  • #7,747
  • Feb 13, 2013 8:47am Feb 13, 2013 8:47am
Possible Euro yen, no confirmed. Hard to know that top in this pair.
Attached Image (click to enlarge)
Click to Enlarge Name: 13feb13.PNG Size: 57 KB
Stocktwit: LuisCarlos - twitter: @lcparodi
  • #7,748
  • Feb 13, 2013 9:08am Feb 13, 2013 9:08am
Disappointingly, both Dow and S&P have just completed what looks like a flat down. Ayaa...
cryptocurrency everytime
  • #7,749
  • Feb 13, 2013 9:08am Feb 13, 2013 9:08am
Quoting infinitus
There are three critical elements for inflation to occur:


a) central banks giving a lot of cheap money (check)

b) banks willing to give this money to companies and the people (failed)

c) companies and people in the right mood to take this money for consume (failed, see post before)



For a posterchild of this circumstances simply take a look at Japan over the last decades.
My friend, I mostly agree with you. Perhaps, it is a matter of perspective.

I am in the US, that is what I experience and know best. So, from my perspective, Fed is not able to raise interest rates at all, ever, due to budget and deficit. They know this fact, but are waiting(hoping) that economy will recover. It will not due to economic conditions you point out. Relatively small increase in interest rates will blow US budget. Also, Helicopter Ben is a student of the depression and will want to avoid that scenario at all costs. So, US will continue to print money as it is the only alternative. Eventually, excess supply of dollars inevitably will lead to inflation as too many dollars chase too few goods.

Thus, US debt bubble and USD bubble will implode but Fed will continue to print dollars and buy US debt. This will lead to world wide depression with other countries facing deflation as USD implodes. Therefore, US will go into a deep recession with high interest rates and inflation until Fed inflates away US debt. In the interim, other countries will go into depression due to world wide recession and appreciation of their currencies relative to imploding USD as they will less worse off.

God, I hate the doomsday scenarios. But I do like the intellectual discussion.

Japan is a good analogy in terms of debt overhang and liquidity trap but they are a nation of savers and cultural differences allow for people to lend to government. US is a ntion of spenders, and has no such cultural compunction to lend to its government. Culturally, US populace is more likely to call for the overthrow of its government as opposed to bailing them out of a mess they created.

B has failed as Fed is paying banks interest on excess reserves and the government has strangled them with regulations. At some point, that will need to be removed. That is when banks will lend and velocity and multiplier take affect in the early stages as people assume inflation is a sign of recovery and growth. At least until economy implodes. Then, there will be no lending as banks go bankrupt and Fed will continue to print money to ward off deflation. At some point, enough dollars and monetizing of debt will win.

I do understand the argument and risk of deflation, I just think the US will inflate rather than deflate at all costs. IMO, this would include forgiveness and buying of all debt.

I hope I at least make some sense and clarified things as I am trying to clarify my argument and trade.
The world you desire can be won. It exists.. it is real.. it is possible..
  • #7,750
  • Feb 13, 2013 9:19am Feb 13, 2013 9:19am
Quoting Mr. Scott
...

I hope I at least make some sense and clarified things as I am trying to clarify my argument and trade.
Once again - good line of reasoning and well argued.
cryptocurrency everytime
  • #7,751
  • Feb 13, 2013 9:27am Feb 13, 2013 9:27am
Hi luis
was not around today to close trade still long e/u any hope of a further climb.
Regards.
Cross
  • #7,752
  • Feb 13, 2013 9:28am Feb 13, 2013 9:28am
Quoting venzen
Once again - good line of reasoning and well argued.
Thank you my friend. Glad I can articulate doomsday scenarios.

Now let us hope it never comes to that.
The world you desire can be won. It exists.. it is real.. it is possible..
  • #7,753
  • Feb 13, 2013 9:46am Feb 13, 2013 9:46am
Quoting Mr. Scott
Thank you my friend. Glad I can articulate doomsday scenarios.

Now let us hope it never comes to that.
Indeed, but is there an alternative?

BTW - I was just reading up about the inverse relationship between stocks and the USD - risk-on/risk-off alternation, etc. It made me think about the AudUsd setup we were discussing a few weeks back. Seems the imminent correction in stocks and its implication of USD valuation will drive the AudUsd pair down - so, in the light of competing wave counts, I am opting for a short position on the pair.
cryptocurrency everytime
  • #7,754
  • Feb 13, 2013 9:52am Feb 13, 2013 9:52am
Quoting Luis Carlos
Possible Euro yen, no confirmed. Hard to know that top in this pair.
I like this view... We have the same, for a part at least
  • #7,755
  • Feb 13, 2013 9:58am Feb 13, 2013 9:58am
Quoting venzen
Indeed, but is there an alternative?

BTW - I was just reading up about the inverse relationship between stocks and the USD - risk-on/risk-off alternation, etc. It made me think about the AudUsd setup we were discussing a few weeks back. Seems the imminent correction in stocks and its implication of USD valuation will drive the AudUsd pair down - so, in the light of competing wave counts, I am opting for a short position on the pair.
As alluded to previously( I am pretty sure in this thread), I believe risk/on off is ending and a new pricing mechanism is taking over, based more on fundamentals.

I do see a correction and potential topping in US stocks soon. Most likely correction soon, then higher, then deeper correction.

Although I could see shorting AUD now for retest, looks like it building a solid base for move higher now.
The world you desire can be won. It exists.. it is real.. it is possible..
  • #7,756
  • Feb 13, 2013 10:07am Feb 13, 2013 10:07am
Hi venzen
help can you confirm u/j h4 chart from a high allready formed a 5 wave a . Am i correct retraced to a wave b now looking at what you showed me checking retrace back at moment and a possible 5 wave down as a wave c to complete a zig- zag.
Regards.
Cross
  • #7,757
  • Feb 13, 2013 10:31am Feb 13, 2013 10:31am
Quoting crosswind
Hi venzen
help can you confirm u/j h4 chart from a high allready formed a 5 wave a . Am i correct retraced to a wave b now looking at what you showed me checking retrace back at moment and a possible 5 wave down as a wave c to complete a zig- zag.
Regards.
Cross
Cross, check the chart Luis posted earlier (this page or previous) for confirmation of the count you mention. It is difficult to be sure of the count at the moment, so wait for 5w down and 3w up to confirm that the wave C down is in progress. impulsive 5w action breaking clean through the low at 123.43 will be good confirmation for me. Use pivot points and Fib tool to determine targets.

Good luck
cryptocurrency everytime
  • #7,758
  • Feb 13, 2013 10:36am Feb 13, 2013 10:36am
Quoting Luis Carlos
Possible Euro yen, no confirmed. Hard to know that top in this pair.
Hi LC,
below is my count for EJ and I have 2 questions:
1. what will be the confirmation for you?
2. how did you know the move down from 127.7 (orange 5 - left side) to 123.5 (orange A) was a-b-c-d-e but not 1-2-3-4-5? (BTW, this part is copied from your chart ). As far as I remember you knew it before orange B was formed.

Cheers MZ.
Attached Image (click to enlarge)
Click to Enlarge Name: ej130213.jpg Size: 123 KB
  • #7,759
  • Edited 11:58am Feb 13, 2013 10:48am | Edited 11:58am
gpbusd big picture
  • #7,760
  • Feb 13, 2013 11:08am Feb 13, 2013 11:08am
It is possible that euron yen could get down now, but be careful to trade against the trend
Stocktwit: LuisCarlos - twitter: @lcparodi
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