Fundamental Information - Forex Trading Strategy - Risk

The following Link shows that if the FED reverses or holds then the US Dollar Index will go down and accordingly EUR/USD will probably go up since it makes up 57.6 % of the Us Dollar Index

http://globaleconomicanalysis.blogsp...nks-to-06.html

Follow Up : Synopsis

Inventories are up 1.6% from a year ago. Sales are down 2.8% from a year ago.

That inventory build was unwarranted, and no doubt inspired by a lot of cheerleading by the Fed about the strength of the US economy.

So here we are once again with another recessionary looking inventory-to-sales ratio. The chart reflects November.

Earlier today we learned December Retail Sales were Negative.

Expect another bad looking chart next month.

Mike "Mish" Shedlock
Read more at http://globaleconomicanalysis.blogsp...kziz4jWt7ho.99

http://www.zerohedge.com/news/2016-0...g-market-crash

Snippet:
Recent remarks by those associated with the Fed, however, seem to suggest otherwise. For example, former Fed official Roberto Perli, now a partner at Cornerstone Macro LLC, commented "It doesn’t signal anything" about future monetary policy, but then added, it is "another sign that the Fed would not be entirely adverse" to reducing its target rate below zero if economic conditions should warrant. In mid-January, New York Fed President William Dudley denied that policy makers were "thinking at all seriously of moving to negative interest rates." However, he conceded, "I suppose if the economy were to unexpectedly weaken dramatically, and we decided that we needed to use a full array of monetary policy tools to provide stimulus, it’s something that we would contemplate as a potential action." Most tellingly, just this past Monday, Fed Vice Chairman Stanley Fischer gave a talk to the Council on Foreign Relations in New York in which he approvingly discussed negative interest rates in some detail. Because a speech by a Fed Vice Chairman sometimes turns out to be a bellwether of a radical shift in monetary policy--recall Bernanke's infamous speech on deflation and unconventional monetary policy in November 2002--Fischer's remarks are worth quoting:

[W]e believed that we could not get interest rates to go below zero. Well, it turns out that . . . four European and one Asian country have now done that. And how can you do that when currency has a zero rate of return? You can do it because it turns out that holding currency is not so easy. If you’re going to keep your billion dollars in currency, you’re going to have to find a place to store it, you’re going to have to insure it, and you’re going to have to have it guarded. And by the time that’s done . . . zero is no longer the lower bound. All those costs are the lower bound, and those costs seem to be significantly below zero in the sense that we have a Denmark and one other country having a negative 75 basis point interest rate, which worked. . . . So that idea is there. And that’s what they’re pursuing. And, you know, everybody is looking at . . . how that works. . . . [W]e have actual experience of countries that have used negative interest rates. . . . Countries that have used it continue to use it. They haven’t given it up. . . . So it’s working more than I can say that I expected in 2012. . . .

And, lest we forget, Fed Chairman Yellen went on record as conditionally favoring negative interest rates as President of the Federal Reserve Bank of San Francisco in 2010:

https://mises.org/blog/mises-war-cash

Snippet: Thus, the added shortcoming of a fiat money standard with no effectual cash circulation (like the current one is aiming to become) is that the central bank is given absolute free reign of the monetary system. In Rothbard’s words, “the more the public is willing to hold checking accounts rather than cash, the greater the inflationary potential of the central banking system (2008, 132). With the last hindrance removed, the likelihood of a breakdown of whatever remains of the monetary system is rapidly increasing.

I have posted with Links and Snippets two important articles. I will summarize on Sunday how this will result in a change in the direction of MONEY FLOW and how this change will effect ALL Classes of Assets and where each of the main currencies will flow and why !!!


It will be about Risk On and Risk Off and the Bond Yields on the 2 Year, 5 Year and 10 Year US Bonds. Gold and Silver form part of this New Money Flow as first the US Dollar Index Goes Up and then Reverses and all Asset Classes change direction again as the Stock Markets CRASH and the BOND BUBBLE finally busts and ALL Currencies adjust to the new STATUS of the US Dollar Index !!!


http://www.finviz.com/forex.ashx

http://www.bloomberg.com/news/articl...-3-23-trillion

Snippet:
The PBOC has stepped up efforts to stem the exodus, warning speculators that they will be punished. It intervened in the Hong Kong market last month after the yuan’s offshore exchange rate sank to a record 2.9 percent discount to the onshore rate. Apart from selling dollars, the monetary authority also gave guidance to some Chinese lenders in the city to suspend yuan lending to curb short selling, a move that contributed to the overnight interbank lending rate surging to an all-time high of 66.8 percent on Jan. 12.

Yuan Outlook
The median estimate in a Bloomberg survey is for the yuan to drop to 6.76 a dollar by the end of this year, with Rabobank Group the most pessimistic with a 7.53 prediction. The currency has declined 1.24 percent so far this year, closing at 6.5755 in Shanghai on Friday. Chinese financial markets are shut for the Lunar New Year holiday.


China’s top economic planner said that the objective for this year is for an expansion in the range of 6.5 percent to 7 percent. The 6.9 percent growth in 2015 was the slowest in 25 years. Exports probably declined for the seventh straight month in January, according to the median estimate in a Bloomberg survey before data due Feb. 15. China increased its gold hoard in January, raising its holdings to 57.18 million ounces at it looks to diversify its foreign-exchange stockpile.
“The smaller decline in the reserves suggests that some capital outflow restrictions imposed in January worked, ” Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong, wrote in a note on Sunday, adding that he estimates the drop in February will be “much smaller.”

If anyone has any questions please feel free to post them and I will be glad to discuss the answers with anyone interested in the MONEY FLOW Formula

http://dailyreckoning.com/2016-globa...y+Reckoning%29

Snippet:
U.S. stocks just had their worst January in seven years, and if I am right much worse is still yet to come this year. The following are 22 signs that the global economic turmoil that we have seen so far in 2016 is just the beginning
1) The number of job cuts in the United States skyrocketed 218 percent during the month of January according to Challenger, Gray & Christmas.
2) The Baltic Dry Index just hit yet another brand new all-time record low. As I write this article, it is sitting at 303.
3) U.S. factory orders have now dropped for 14 months in a row.
4) In the U.S., the Restaurant Performance Index just fell to the lowest level that we have seen since 2008.
5) In January, orders for class 8 trucks (the big trucks that you see shipping stuff around the country on our highways) declined a whopping 48 percent from a year ago.
6) Rail traffic is also slowing down substantially. In Colorado, there are hundreds of train engines that are just sitting on the tracks with nothing to do.
7) Corporate profit margins peaked during the third quarter of 2014 and have been declining steadily since then. This usually happens when we are heading into a recession.

http://globaleconomicanalysis.blogsp...d-10-year.html


Fed Tactics

“Debt only works if it generates an income to repay principle and interest.”

Research indicates that when public and private debt rises above 250% of GDP it has very serious effects on economic growth. There is no bit of evidence that indicates an indebtedness problem can be solved by taking on further debt.

One of the objectives of QE was to boost the stock market, on theory that an improved stock market will increase wealth and ultimately consumer spending. The other mechanism was that somehow by buying Government securities the Fed was in a position to cause the stock market to rise. But when the Fed buys government securities the process ends there. They can buy government securities and cause the banks to surrender one type of government asset for another government asset. There was no mechanism to explain why QE should boost the stock market, yet we saw that it did. The Fed gave a signal to decision makers that they were going to protect financial assets, in other words they incentivized decision makers to view financial assets as more valuable than real assets. So effectively these decision makers transferred funds that would have gone into the real economy into the financial economy, as a result the rate of growth was considerably smaller than expected.

“In essence the way in which it worked was by signaling that real assets were inferior to financial assets. The Fed, by going into an untested program of QE effectively ended up making things worse off.”

Flattening of the Yield Curve

“Monetary policies currently are asymmetric. If the Fed tried to do another round of QE and/or negative interest rates, the evidence is overwhelming that will not make things better. However if the Fed wishes to constrain economic activity, to tighten monetary conditions as they did in December; those mechanisms are still in place.”

They are more effective because the domestic and global economy is more heavily
Read more at http://globaleconomicanalysis.blogsp...vfHlClzsxyG.99

Failure of Quantitative Easing

“If you do not have pricing power, it is an indication of rough times which is exactly what we have.”

The fact that the Fed made an ill-conceived move in December should not be surprising to economists. A detailed study was done of the Fed’s 4 yearly forecasts which they have been making since 2007. They have missed every single year.

That was another in a series of excellent interviews by Gordon Long. There's much more in the interview. Give it a play.

Finally, lest anyone scream to high heavens, Lacy is obviously referring to price inflation, not monetary inflation which has been rampant.

From my standpoint, consumer price deflation may be again at hand. Asset deflation in equities, and junk bonds is a near given.

The Fed did not save the world as Ben Bernanke proclaimed. Instead, the Fed fostered a series of asset bubble boom-bust cycles with increasing amplitude over time.

The bottom is a long, long ways down in terms of time, or price, or both.

Mike "Mish" Shedlock
Read more at http://globaleconomicanalysis.blogsp...0hu4c0tV08j.99

The U.S. non farm payrolls (NFP) report published on Friday revealed a slowdown of the headline jobs number. The American economy added 151,000 jobs in January coming under the markets forecast of 190,000. In December the economy posted a massive 292,000 (now revised downward to 252,000) and a lower number was anticipated. Hourly wages rose in January by 0.5 percent. The unemployment rate also dropped to 4.9 percent given the strong pace of job gains in 2015. The current unemployment rate in the U.S. is the lowest since November 2007.

The effect of the miss on the headline NFP number is muted given the impact on an already improbable rate hike by the U.S. Federal Reserve in March. Macro economic conditions have shifted radically from December when the Fed announced its historic first rate hike in a decade. The follow up to that policy decision will not come in March if U.S. fundamentals continue to slowdown.

The economic calendar for next week is lighter than usual as most major central banks skip February. The highlight will be U.S. Federal Reserve Chair Janet Yellens testimony as part of her semiannual Monetary Policy Report. Chair Yellen will face questions from the House Financial Services Committee on Wednesday, February 11 at 10:00 am EST and then from the Senate Banking Committee on Thursday, February 12 at 10:00 am EST. Investors will be on the lookout for comments on the next meeting of the Federal Open Market Committee (FOMC) on March 15 and 16.

As promised here is why using Fundamental Information along with MONEYFLOW allows FX Traders to have an edge in knowing the probable direction of the currency or Asset Class that you are trading.

As long as the PERCEPTION in the Markets are that the FED will continue to raise then the US Dollar will continue to move over 100.00 in the US Dollar Index since most if not ALL other Central Banks are cutting interest rates or keeping them the same. In the recent case of Japan we now have negative interest rates where the funds that the banks leave on deposit with the Central Bank will incur a charge to leave the money there which will perhaps cause the banks to loan the money out and stimulate the economy. However that is not happening as planned since the banks know the real instability of the financial networks and just like in 2008 when TARP was needed to keep the Ponzi Plan going this time there is no more room to cut without causing other problems.

So if Yellen puts out some words that the market is not expecting about a delay in raising rates shortly then the US Dollar Index will go towards 90 instead of 100 and EUR/USD and Gold will increase in value. As the Dow and NASDAQ and SP500 sells off then Risk is OFF and money might flow more into Gold and other Asset Classes since Money flowing into the US Bonds whether the 2 Year US Bonds or the 5 Year US Bonds or the 10 Year US Bonds that BUBBLE is also close to breaking down. As China and Iran and the other enemies of the USA start to move away from the US Bonds and remove the Power of the US Dollar which since August 15, 1971 has only been backed by the Reputation and Goodwill generated by the USA which clearly is not the case anymore.

I await feedback or questions in order to understand if anyone reading my remarks understands or is interested in improving their Forex Trading Results. Enjoy Super Bowl 50 and the PERCEPTION is that Carolina will win !!! Soon Reality will take over and the score will determine the result !!!

Here is more information on the weeks top forex market events:

1. Wednesday, February 10, US Fed Chair Yellen Testifies
2. Wednesday, February 10, Crude Oil Inventories
3. Thursday, February 11, US Fed Chair Yellen Testifies
4. Thursday, February 11, US Unemployment Claims
5. Friday, February 12, US Core Retail Sales

http://www.equedia.com/why-vancouver...m_medium=email

Snippet:
A World of Debt

One of our biggest concerns should be the amount of debt creation since 2008.

Debt and bad loans around the world are causing Forex markets to tremble in fear. This is precisely why we have seen so much volatility.
To fix the 2008 crisis, the Fed, and other central banks, resorted to debt creation to save the world. By issuing more money, they attempted to fix the 2008 financial debt bubble with, well, more debt.


As I mentioned in my Letter, “The Consequence of America’s Path,” when the Fed prints, other countries around the world print to keep up with the currency peg. They do this by issuing more of their own currency in relation to how much the US prints; if they don’t, they risk losing exports on a global scale because it becomes cheaper for their clients to do business elsewhere.

However, when countries attempt to keep this peg, they are devaluing their own currency by issuing more of it. The problem is that most of these nations do not have the ability to absorb the amount of currency creation through spending, nor can it export its inflation.

The US, on the other hand, is the most developed and largest economy in the world. Its dollar is the world reserve currency, which allows it to enjoy the freedom of globalization. In other words, the US can export its inflation when it prints; most nations cannot.

Call it QE, call it stimulus, call it whatever you want, these monetary actions encourage banks to make more loans and take on more risk with financial assets. The idea is that banks take the newly printed money and buy assets to replace the ones they have sold to the central bank. Since banks can only do so much with all of this cash, they lend the money to hedge funds, corporations, traders, etc.

This is why we have seen record investments and valuations in private and public companies. This is why the stock market up until recently was at an all-time high. The money needs to go somewhere.

In the U.S., loans were made to hedge funds, venture funds, tech startups, solar startups, infrastructure, and the big shale boom.
In Europe, loans were made to struggling corporations, bank bailouts, and consumers to create a new housing bubble.

Since credit was so easily spread, analysts now estimate that bad loans in Europe total more than $1 trillion euros. That’s equal to Spain’s annual GDP.
From Italy to Brazil, bad loans or non-performing loans (NPL) all over the world continue to rise as a result of the contagion of cheap and excess money.

In Russia, bad loans to consumers have already doubled over the last four years.
Via Bloomberg:
“Banks catering to Russian consumers have had a reality check since Hollywood hard man Bruce Willis declared retail lender National Bank Trust “badass, like me” four years ago.

Since then bad loans to consumers have doubled to 8 percent after the economy tipped into a recession that is threatening to be the longest in two decades. Russia’s ratio of defaulted retail debt has overtaken that of its biggest peers in emerging Europe, according to data compiled by Bloomberg Intelligence.”

Talks of hedging against bad loans are surfacing all over Africa. In Venezuela, they’re not even worried about bad loans – they’re worried that the whole country is about to default.

And don’t think Canada isn’t on this list. We’re also pressured with the same worries, as oil’s collapse has sent bad loans in Canada, primarily Alberta, soaring.
All of these bad loans, however, pale in comparison to the magnitude of bad loans that belong to the second largest economy in the world.
And this is where we could witness the next major financial shock.

Do you think Canada is in trouble with its bad loans?

What about the rest of the world?

Hello everyone. Exciting times now In the Forex Market. I intend to start posting again daily.

This is a very important week in the Forex market with the BOE probably cutting rates on Thursday and the NFP number out on Friday. If it is under 150,000 there will be a weakness in the US Dollar and over 200,000 there will be strength. Of course there are other factors such as Oil going below $40.00 again and will USD/GBP go up or down with a rate cut to 0.25 % ? Many interesting days ahead this week.