Ameba PRO Strategy -|Trading as Investing|- 3 birds of wisdom

I m waiting 20 minutes to see inflation data from Europe.
After that finishs we will continue our job and we will put one more think to our analysis.

Stay tuned.

Thanks Nikola..
Very interesting thread..
Hope more input from you in future..

Five star for you!

You see here some new stuffs as "Feds Projections 2015" and so on.



First I computed average movement of last 5 years (2010 ,2011 ,2012 ,2013,2014).
The principle is same as I showed for 2014 average movement.
You should take GDP data from January 2010 to December 2014 sum them,and dived them by total number of everymonth.
The result is 2.3%.

Another thing,we put Federal Reserves Procjetions for GDP.
Every month we have meetings and by the time they give us their projections for major indcators as GDP,unemployment,CPI..
http://www.federalreserve.gov/moneta...bl20141217.pdf
You can check the last one here.
So FEDS projects from 2.6% to 3.0% (that is central tendency).

Conclusions ,based on this data.
Going from upside to down .
GDP averaging 2.5% in 2014,which is bigger than 2.3% average growth of last 5 years.
Actual rate is 2.2% which is below the trend (but above that market expected last time,speaking of USD action).
Also 2.2% is below FEDS projection as well.
So we have a small slowdown,of course 2.2% is still strong growth rate!
We see that last year GDP was strongest at the on of the year and weakest during the middle.After April it is gone to negative terriotory ,below 0%.

From this picture and analysis we can get a lot of valuable conclusions.
It is great tool to track economic activity from macro-pespective.

History data teach us a lot,we are learning from historical experience.
I think I gave you here a good tool and for your homework ,you should do the same for inflation data and unemployment for USA.
After that you will see where we are and make valuable conclusion.

Trading and investing are just analyzing the data.
If I trade some THING,I like to have good facts for that trade (since I'm long term trader).
To have good analysis behind every trade.
On forex , economics are underlying mechanism that drives it.
Action and reaction.

Watch on FX more like on investing ,than pure trading (buying and selling),every kid could press sell and buy and make a trade.

There is the big difference between those two.

When someone asks me why I did some trade,I really like to respond through economics.Because it is tangible and real ,it affects human lifes.

Everybody can feel big inflation oscilations ..but speaking of RSI ,Stochastics ... hmmm I'm not sure.

And one from Warren for end.

Thanks Muhsin my friend I give my best

And guess what ! Here we come !

It is already started

http://news.forexlive.com/!/economis...-data-20150302

"Economists are lowering GDP estimates after January US construction spending.
Barclays lowered its Q1 GDP tracking estimate to 1.9% from 2.1%. Goldman Sachs nicked it to 2.5% from 2.7%."

Media are always media
But based on our analysis from previous year, we could see that we are in that cycle , it is something like seasonal pattern.
We will see how bad it will be .

Today we have GDP data from CANADA,so lets analyze it .

For that analysis I will take Canadian GDP annualized (QoQ) ,so for quarters .

From picture we see that current rate is 2.8!
That is a good rate of GDP (QoQ) growth.

Quarter contains 3 months , and it is logically that four quarter makes 12 months.
Current 2.8% rate is bigger than both 5 years average (2.4%) and average of 2014 year (2.5%).
It is also bigger than last quarter of 2013,which is 2.7%.

What is bad here ?

The "bad" thing is that this is QoQ GDP realease and it makes big swings mostly.
It is three months and during that three months in todays world everything is possible , big oscilations and fluctuations.
As you can see market expect 2.0% which is significantly lower than current 2.8%,and if we see last year and data from 1Q (2.7%) ,this 2.0% could paint a possible
bearish picture.Although 2.0% is still strong growth.

I use QoQ because to change a perspective,you can use techinical terms and watch on QoQ as 4H chart ,as higher time frame ,comparing to periovus GDP (for USA) that comes out every month (and is in technical terms 1H).

What is good here ?
You know that on higher time frames,signals are more powerful

Watching data carefully!

GDP at 2.4% better than anyone forecasted

You know now a little bit more about fudnamental data.

Now I will switch a little bit to part 3 of long term,which is named "Other markets".

It is important to track a few markets,because markets are connected today very well

So stay tuned...

Today we have ECB meeting ,so we will see new projections !

Other markets

I said that market are connected very well today.
There is a lot of ways to benefit from market correlations.
I use a few markets , which I fully understand and they give me really good HINT what are the possible scenarios behind the economic hill and where market journey could lead .

I split them into two categories ,one is financial and another one i call "raw materials".

Financial have to do more with (logically) money and financial asset.
Raw materials are goods that makes in good part one economy of country (commodities).

Financial have to do more with government tools.
And from other side Raw materials have to do more with countries natural wealth.
Markets are connected because trade is today very connected.
And every person have mostly different reason to make trade but they have same goal,to reach comfortable
deal at comfortable price.
I'm selling for example euros long term , and for example some other guy need euros just for today and he buy.
Through all this era ,that I call "MODERN ERA",but it in some way stupid name,because every generation
makes new era (their modern) and for us that will be as well modern.
But modern in way when computers occurs and when trading becomes able through computers.
As we do for example on FX,through our trading platforms.

Raw Materials

In this section,there will be words about ->commodities (http://www.investopedia.com/terms/c/commodity.asp)
For good reason this part will start with our BLACK GOLD - OIL!
All that machines around us,things that burn that black gold in large amount.
Building news cities,drives us to the other places,make new stuffs.
It is ALMOST impossible to imagine how the world,as we know today will work without this thing.
So it is very important to track this commodity market.

It paints good picture ,in what direction we could go.
You must spot the real value of the oil.
Once you determine that and conclude that on some places on this our brilliant planet,there is much much more oil than on other parts -> You've caught the bull by it's horns!
The good thing is that with science and reasoning we are on the good way to win that big disbalance.
And by the time we could totally overcome that issue.
I will be focused on economics and trading but as you know OIL IS DIRTY GAME!

Impact of oils on economics are best reflected on inflation .

As we can see the current picture represents perfect example of such.
Oil lose 50% of value in the short period!
That sends a lot of shock signals around the globe.
We track CRUDE OIL on NYSE (New York Stock Exchange). It is marked as "CL1!".
I will leave you with this picture for a while ,then I will back and put some pictures and we will continue.

Now it is time to continue.

Here is ONE more picture.

From previous picture we can see a free fall of OIL prices,starting from middle of previous year.

This picture shows the impact of oil prices on the inflation around the world.



You can see that disinflation ( on some places deflation) hit economies.

You see how at first oil affects inflation around the globe.

The good thing is that we have a currency to trade ,which is directly in correlation with oil prices,that is famous CAD.
Canada is oil gigant.
Famous OIL SANDS!

How we come to this ?
International trade makes up a large part of the Canadian economy.
Exports amount to more than 45% of its GDP !!!! Pay attention to this !
It is almost HALF! Which is enourmous!
Canada is one of the few developed nations that are a net exporter of ENERGY!
Canada mostly export to USA (I think about 79% of total exports) but that is not that important in this case.

I will put chart of USD/CAD for example and you will see how oil influnce CAD to go down.

It is interesting that USD/CAD made from July 2014 (time when oil start to fall) till today 2186 pips move in the one direction!
And for the same period of the 2013 till 2014 it made just about 590!

I like to do calculations and make things more visually.
So with simple calculation we get that for the same period CAD fall against USD about 3.7 times faster than in the 2013/14.
Which is partly because of the good USD rally against all and good data. But also good part is due to oil prices!

We come to the conclusion that oil is really important for both economy state and for our trading on FX.
But I don't want you to stop here.
It is time to get into accounting.

We have bunch of useful data availabe on the internet, and analyzing those data makes things more clear.
This view will help you in your way to fully understand how things work.

I always watch on one country as one person.To simplify things.
What one person owns ,makes his wealth and power.
Our Canadian buddy is in the good part OILER.
He have that oil and he takes money by selling it.
So,he is trader ,right ? He trade his oil.
HERE COMES THE TRADE BALANCE!

We got in the GDP section "Gross private domestic investment " which consist import and export data.
As well we have separated TRADE BALANCE.
So if our Canadian buddy makes good trading and export more than he import,we have surplus.And vice versa deficit!
Let's see a FEW pictures.

BALANCE OF TRADE

Things go really bad since oil goes down.

EXPORTS

Export slowdown

CURRENT ACCOUNT

Current account shows that deficit is about 40% bigger than before oil collapse.

CAPITAL FLOWS

Money for investments,business and trade.

TERMS OF TRADE

And here are the terms.

FOREIGN DIRECT INVESTMENT

Investors fly away from Canada.

IMPORTS

And what could go good in this conditions! Of course IMPORT!

CONCLUSION!

In the January ! Bank of Canada SLASH THE INTEREST RATES!
To boost economy.EASING MODE.


By cutting the interest rates,during the 4 hours USD/CAD rally extends to 330 pips!!
And if you entered and hold till today (because prices of oil are still bad) it is 610.
Bear in the mind from other side if you are long term trader , you are now 2000 pips in plus

Stay tuned...

Tomorrow we have Inflation data from EU.
I will make later one chart for it .

From other side we will get projections on Thursday from Federal Reserves (also good for our analysis).

And I expect this week SNB to possible cut interest rate !

Current inflation is -0.3.
Market expect tomorrow to stay at -0.3.
You could see that we are well below 1.74% (average of 2010/14 year,5 year average).
We are below average of 2014 as well! Below 0.52%.
ECB project in 2015 that inflation will move at 0%,for now we are as well below that level.

Tomorrow closely watching data.

ECB recently start with easing (quantitative easing) to boost inflation and growth in the Europe.
Euro fall really hard in recent period.

By the way.
On Friday oil fell strongly and CAD followed really greatly.
USD/CAD 130 pips rush

Inflation (CPI) in Europe is at -0.3 , unchanged.As market projected.
The good thing is that core inflation rose to 0.7%.
Core inflation exclude food and energy prices.

Later today we will continue with "raw materials" .

Today we will continue

Australia and copper

Today we will see correlation among australian dollar and copper .

Australian economy is mostly based on mining industry and manufacturing.
Australia is a big exporter to at first China, then Japan, Korea ,Indonesia and others.

But major partner is China and that is important to know.
Because of that I (and most economists,traders) closely watch developments in China,as global trend machine.
From this picture we could see that imports from China fell strongly.



But lets back to Australia.

How we can take advantage of this knowledge in our trading and analyzing.
Well we could follow for example copper prices.

Let see a good correlation among AUD and copper.


We see a strong fall in the copper since July 2014 ,same as in the AUD/USD.
This is a weekly chart for copper and picture is not that small that I could put it in the same with AUD/USD.
So I will upload it also as separate one,or upload it separately (*ucking english ).



Copper prices rises all to the July and than make a peak and fall.
Same with AUD ,it made his peak along with copper prices in July.

Monitoring copper we could trade AUD really smoothly,as many traders.
It is good for example for flow trading.

Now you have another correlation from "raw materials".

Soon more, I give my best to write as much as I can , but obligations obligations ..

How about reality check:

"Falling wages aside (a critical topic as it singlehandedly refutes the Fed's bedrock thesis of no slack in a labor force in which there are 93 million Americans who no longer participate in the job market) going back to the original topic of which economic factors are prompting the Fed to assume there is an economic recovery, without exaggeration, all alone.
Is there nothing else that can validate the Fed's rate hike hypothesis? Well... no.
Below is a selection of the economic data points that have missed expectations in just the past month.


MISSES

1. Personal Spending
2. Construction Spending
3. ISM New York
4. Factory Orders
5. Ward's Domestic Vehicle Sales
6. ADP Employment
7. Challenger Job Cuts
8. Initial Jobless Claims
9. Nonfarm Productivity
10. Trade Balance
11. Unemployment Rate
12. Labor Market Conditions Index
13. NFIB Small Business Optimism
14. Wholesale Inventories
15. Wholesale Sales
16. IBD Economic Optimism
17. Mortgage Apps
18. Retail Sales
19. Bloomberg Consumer Comfort
20. Business Inventories
21. UMich Consumer Sentiment
22. Empire Manufacturing
23. NAHB Homebuilder Confidence
24. Housing Starts
25. Building Permits
26. PPI
27. Industrial Production
28. Capacity Utilization
29. Manufacturing Production
30. Dallas Fed
31. Chicago Fed NAI
32. Existing Home Sales
33. Consumer Confidence
34. Richmond Fed
35. Personal Consumption
36. ISM Milwaukee
37. Chicago PMI
38. Pending Home Sales
39. Personal Income
40. Personal Spending
41. Construction Spending
42. ISM Manufacturing
43. Atlanta Fed GDPNow

So a pattern emerges: we have an economy in which jobs and only jobs are acting as if there is a strong recovery, while everything else is sliding, disappointing economists, and in fact hinting at another contraction (whatever you do, don't look at the Fed's internal model of Q1 GDP)."

Add to that that NFP is cooked numbers.. How can you rely on this BS?

Thanks for participation in this thread.

Well that is another topic, about what they need to do and what is wrong.

Big salute for Zero Hedge website,I'm fun of it.

I don't have "INSIDE INFORMATIONS".
I'm using here official data published by Federal Reserves and those that market participants follow.


It is far away from splendid situation in the USA and Yellen also said that labour is still in the recovery mode ,I mean everyone could see that.

U-6 Unemployment Rate shows higher numbers.
Low participation rate in the labour.

But I m here to show people how to get macro view on all this and to make good trades decision in the future.

About recent data , don't think that you have more indicators in your consideration than Federal Reserves have

This weak economic data are reflected very well in the inflation and will reflect as well into GDP in the future.

I have my theory that everybody have right about certain thing in the certain percentage.
So everything is true in some percent.

Markets are sensor and bubbles are unpredictable mostly because everyone participate in it.

I think that they won't hike rates if inflation is at zero or too low hehe

USD is way to high , so the FOMC could be dovish tonight.

But not to make mess here ,because I'm trying to "paint" wider picture than just USA and shitty Federal Reserves.

Conclusion : if they hike rates and fundamentals are quite oppiste they will need to lower it soon .Or economy will itself cut it by wonderful crisis.

Thanks again