Money Flow Trading Method along with Risk Management

BenjaminIs! Questions: the US government's debt exceeded $ 20 trillion in 2017.
<At the end of 2016 the US national debt has increased by 1.3223 trillion. According to preliminary estimates, the cost of $ 20 trillion will be exceeded in the first quarter of 2017 So take America into debt $ 10 trillion in just eight years. Over the previous 10 trillion more than 200 years. Despite the large debt due to the extremely low interest rates, US interest expense on its securities not more than $ 300 billion a year, and in the existing conditions, can accumulate debt forever. But if the rate on 10-year bonds will rise from the current 2% to 4.5% (baseline forecast of Congress), it will increase the cost of services up to 800-900 billion dollars a year for 7-10 years, and coupon payments will go up to half government tax revenues. [20] Against this background, the forecast, the phenomenal pace of growth of the debt shows a total loss of control and generates talk of a possible default of the largest economies in the world. From June to October 2016 total investments in government bonds of the Americas decreased by almost 242 billion dollars [21] [22]. The total amount of debt owned by other countries, fell to 6.038 trillion dollars. Major sellers in China, Belgium, Russia and Norway [23].>


Here's a question for everyone: with such figures, which will increase the rate on the Dow up to 4-5%? The Federal Reserve will be beneficial for long-term loans in the form of bonds (all buy 5-10Y). Our job as traders do not miss the turning points 10Y and Dow? These documents relate all other assets? I think correctly?


Yes my friend you are absolutely right. We are on the verge of absolute financial collapse around the World and that is WHY the FED will soon go back to QE or whatever they call it.

We did not create the incredible mess so we have the moral and ethical right to make tremendous profits since we can see into the Future. Your understanding is excellent.

I am off for lunch until around 2:30 PM EST. Good work.


Benjaminis

Hello

I just got back and I see the Dow recovered from the low. How did you do with your Limit Out Stops ? Give me some updates please when you can. I will catch up now. Janet Yellon only speaks at 7 PM EST so she can affect markets starting more in Europe at 3 AM EST.


Benjaminis

TEST QUESTION !!!

Please look at this excellent chart.

http://www.forexfactory.com/attachme...4&d=1484216892

The Question is when and if the Dow Jones index of 30 stocks reaches 19,500 (US 30) where should the USD/JPY be ?

Please post your answers on our thread.

Thank You.


Benjaminis

Thank You
We have our first reply from wayfarer. That reply is excellent. Can we have some more answers please.

http://www.forexfactory.com/attachme...5&d=1484255084

I am sure we all understand how these charts and others help us all. We are not that far from 19,500 and then next we go to 19,000.
We will go there and maybe as soon as January 20, 2017 by 4 PM EST !!!

We have another reply from piphunting.

TEST QUESTION !!! Please look at this excellent chart. http://www.forexfactory.com/attachme...4&d=1484216892 The Question is when and if the Dow Jones index of 30 stocks reaches 19,500 (US 30) where should the USD/JPY be ? Please post your answers on our thread. Thank You. Benjaminis Thank You We have our first reply from wayfarer. That reply is excellent. Can we have some more answers please. http://www.forexfactory.com/attachme...5&d=1484255084 I am sure we all understand how...

On that chart seems to be around 112.50. Which is also confluence with the yearly pivot.
Attached Image (click to enlarge)
http://www.forexfactory.com/attachme...1&d=1484262746

Thank You KeepCalmfx


I think it will look something like this. (Between 111.14 - 111.97)
Attached Image (click to enlarge)
http://www.forexfactory.com/attachme...1&d=1484290219

 

1. Now we will see where it actually is when US 30 reaches 19,500

Benjaminis

http://www.mauldineconomics.com/the-...-sell-the-news

Snippet:

The 10th Man


Buy the Rumor, Sell the News

By Jared Dillian

January 12, 2017

Was anybody here trading in 2003?

It was the year we invaded Iraq (regrettably). The markets were expecting a decisive victory. During the days and weeks when American troops advanced on Baghdad, the market climbed. As they entered Baghdad and marched on the center of the city, the market traded higher and higher.

Finally, American troops fastened a rope around the neck of Saddam Husseins statue and attached the other end to a tank. The world watched on television as the tank backed down and toppled the statue.

And at that very momentstocks started to fall.

The rumor was that the US would win the war quickly and decisively. The fact or news was that the war itself turned out to be the simplest part and the 14 years since have been anything but.


Can you see the parallels with today?

Stage 1: The prospect of war/a Trump presidency is scary: stocks go down.
Stage 2: Once war/the Trump presidency commences, people see the positive aspects of it.
Stage 3: The reality of war/the Trump presidency proves to be far messier than anyone anticipated.


One could make the argument that Brexit has just entered Stage 3.
This pattern is played out over and over again in financial markets. Year after year after year.


Inauguration Day

I think that Inauguration Day will mark a big turning point in the stock market. Stocks could be headed for a dirtnap.

There is historical precedent: see what happened to stocks after Reagans inauguration.
http://ggc-mauldin-images.s3.amazona...12_10thMan.jpg

Right now, stocks are pricing in the most pro-business administration since Reagan, or possibly ever. The market is up. Sectors that benefit from deregulation are up even more. Bond yields are up. Its the Trump trade.


The reality is that Republicans do not have 60 votes in the Senate, so getting things done like tax cuts is going to require some horse trading.

Trump does have leveragelots of Democrats are up for reelection in the Senate next year, and many of them from states where Trump won big. It should not be hard to peel some of them off.

But that is where the horse trading comes in. Will Trump get the tax rates he wants? Probably not.

Will Trump get a full repeal of Dodd-Frank? Probably not.

What we end up with will definitely be better than what we had before, but in my opinion, the market has every bit of Trumps proposed agenda priced in.

So just like after US troops pulled down the statue and the reality of governing Iraq set in, once Trump is sworn in, the reality of trying to get this stuff through Congress is going to set in.

In fact, Id be surprised if the top tick isnt when Trump says: I do solemnly swear

Anger Management
If youve read my book, Street Freak, you know I used to have a hot temper. I was perhaps the biggest destroyer of phones on the trading floor. Its a good thing that my colleagues had thick skin, otherwise I might have been the destroyer of relationships.

Ive undergone a gradual but important change over the last eight years, since leaving trading: I really dont get angry all that often. And that is by design.
There is nothing I hate more than getting angry. It disturbs my peace for days. Cant sleep, cant think about anything useful, distracted all the time.


They say resentment is like drinking poison and waiting for the other person to die.

So I really take pride in the fact that it is very, very hard to make me angry. Id say that Im down to about one meltdown a year. Which is one too many.

Not to say I dont get annoyed from time to time. In fact, in the newsletter business, I spend about 30% of my time in a state of annoyance. But when youre angry, there are changes to your body chemistry. The adrenaline starts pumping. Thats what I want to avoid.


I want to be the kind of person who gets rear-ended by someone at a stop light and gets out of the car and asks if the other person is okay.
I am not there yet!

Now you could say that by taking me out of the high-pressure environment, it was easy for me to work on anger issues. There is probably some truth in that.
Still, even if I got a job on a trading floor, I dont see myself going back to my yelling and phone-throwing days. Ive worked hard at it.

You can see for yourself when you meet me face to face at this years Strategic Investment Conference, which is held in May at a posh Orlando resort. I love meeting subscribers face-to-face. Last years conference was amazing.


______________________________________________
1 Whenever you intervene in a complex system, you are likely to bring about results that are the opposite of what you anticipated.
2 The actual date of the invasion was 3/20/03, which roughly coincided with the bottom in stocks. Saddams statue was toppled on April 9 of that year, which led to a small pullback, but stocks continued higher throughout the rest of the year as the market recovered from the dot-com bust.
http://www.mauldineconomics.com/imag...ed-dillian.png
Jared Dillian

USDJPY - 112/500 - 113/00

Hello dttsomh

Hope you are managing your extra duties. I am positive you see where I am going with this. If you have a few minutes perhaps you can post and give me your excellent observations. Nice to see you online even if for a little while.


Benjamin

HEADS UP !!! Excellent current Zerohedge article.

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

Snippet:

by Tyler Durden
Jan 12, 2017 4:02 PM


For Nasdaq traders today...



Small Caps (and briefly The Dow) sunk into the red for 2017... (NOTE: the moment Trannies and The Dow tagged unchanged for 2017 a miracle bid appeared)...
http://www.zerohedge.com/sites/defau...12_EOD11_0.jpg

Second day in a row if VIX-smashing, panic-V-shaped-recovery-stock-buying...
http://www.zerohedge.com/sites/defau...12_EOD13_0.jpg

Though we note it seems all about the European close once again...
http://www.zerohedge.com/sites/defau...112_EOD8_0.jpg

They were desperate to get Nasdaq green into the close...
http://www.zerohedge.com/sites/defau...12_EOD12_0.jpg

In fact everything jumped after Europe closed...
http://www.zerohedge.com/sites/defau...112_EOD7_0.jpg

Nasdaq broke it's winning streak...
http://www.zerohedge.com/sites/defau...12_EOD10_0.jpg

While everything bounced, financials were the day's laggards while Utes and Healthcare managed to get green by the close...
http://www.zerohedge.com/sites/defau...112_EOD9_0.jpg

Treasury yields rose and steepened notably after the 30Y auction...(same as yesterday) but remain lower on the week...
http://www.zerohedge.com/sites/defau...112_EOD3_0.jpg

Not helped by clear pressure for steeper curves from The Fed...

1. HARKER: WHEN RATES AT 1%, NEED TO LOOK AT UNWINDING BAL SHEET
2. BULLARD: BAL SHEET ROLLOFF MAY BE BETTER THAN AGGRESSIVE HIKING

http://www.zerohedge.com/sites/defau...0112_EOD_0.jpg

The USD Index plunged to its 50-day-moving-average...almost erasing all the post-FOMC gains...
http://www.zerohedge.com/sites/defau...112_EOD5_0.jpg

And bounced...
http://www.zerohedge.com/sites/defau...112_EOD6_0.jpg

The USD bounce back was led by GBP and JPY weakness...
http://www.zerohedge.com/sites/defau...112_EOD4_0.jpg

Gold is having a great week while crude remains red...
http://www.zerohedge.com/sites/defau...112_EOD1_0.jpg

But as the dollar, bond yields, and stocks ramped hard in the afternoon, gold limped back below $1200...
http://www.zerohedge.com/sites/defau...112_EOD2_0.jpg


COMMENTARY FROM Benjaminis : Great Current Research !!! Thanks Tyler.

ANOTHER HEADS UP CONCERNING EUR/USD !!!

http://seekingalpha.com/article/4036...o-relationship

Summary
Latest Eurozone data indicate a substantial jump in inflation in Germany in December , eliciting calls that ECB president Mario Draghi, end his ultra-loose policy and raise the policy rate.
The reality is that with energy costs rising quickly, the strong disinflationary pulse that the globe had seen in 2015-2016 has been neutralized. The deflation meme is dead.
The overwhelming impact of rate differentials still favor the USD, but there comes a time when significantly higher inflation rates in the US vs. Row starts to hurt the currency.
The universal outlook of higher crude oil prices in the medium term has the potential effect of limiting future USD gains, if not weakening it outright against the euro.
Our short-term outlook is for the US Dollar to strengthen until mid-February, after which the US currency should weaken significantly against the euro and other major currencies.
The latest inflation data from the Eurozone indicate a substantial jump in inflation in Europe's largest economy in December, eliciting calls, especially from Germany, that the European Central Bank president Mario Draghi, end his ultra-loose monetary policy and raise the ECB's policy rate. Draghi once more faces the wrath of Germans fearful that savers face devastation due to zero or even negative interest rates, and fretting that the supposed "guardian of price stability" will let them down, even as domestic inflation starts to rise.
This reaction is natural in Germany, where people have been conditioned to fear inflation. But the situation is complicated by the fact that the ECB sets monetary policy not only for Germany, but for the whole euro area. Moreover, there is a wide disparity in inflation rates among euro area countries - Germany happens to have the highest Harmonized CPI in December, if tiny Lithuania is excluded (see chart below, latest available data).

https://staticseekingalpha.a.ssl.fas...1557887533.png
On a eurozone-wide view, the numbers are more benign - CPI growth in the currency bloc is at 1.1 percent in December, almost twice as fast as the previous month but still well below the goal of just under 2 percent. The ECB predicts euro-area inflation won't reach that target until at least 2019.

https://staticseekingalpha.a.ssl.fas...rId4_thumb.jpg
ECB policymaking in the past several years has been conditioned by the slow economic growth in the euro area and the actual fear of deflation, driving the central bank to adopt radical measures, like negative interest rates, in efforts to underpin growth. The ECB's drive towards zero and even negative rates has been the biggest single factor that has kept the EUR lower against the US Dollar over the past several quarters.
However, the first inflation data in the new year brings a reminder of just how strong the German economy has become during this time. The number of jobless fell more than forecast in December. The unemployment rate remains at a low of 6 percent, and inflation (boosted by higher energy, food and goods costs) increased a record 1.7 percent from 0.7 percent (see chart below).

https://staticseekingalpha.a.ssl.fas...rId5_thumb.jpg
The reaction to the data was immediate and predictable - Bloomberg News reports that Clemens Fuest, president of the respected Munich-based Ifo research institute, called on the ECB to consider ending its bond-buying in March, which the ECB Governing Council decided just last month to extend the program until at least the end of 2017. Germans, who are some of the world's great money savers, have always been leery of the ECB's bond-buying program, and the low interest rate regime that comes with it.
Bild, Germany's most-read newspaper, in an opinion piece wrote that people "are seeing a net devaluation of their savings while governments in euro countries can continue borrowing at historically low costs," in a regime of rising inflation while deposit accounts' interest rates are at near zero. The Handelsblatt newspaper reported that Germans could lose tens of billions of euros a year on the real value of their savings under those conditions, which Bavarian Finance Minister Markus Soeder told the paper would be "devastating."

https://staticseekingalpha.a.ssl.fas...rId6_thumb.jpg
The reality is that with energy costs rising quickly in the past few months, the strong disinflationary pulse that the globe had seen in 2015 and during the early part of 2016 has been all but neutralized. The deflation meme, as we stated before, is dead. Inflationary expectations have jumped up in Europe, and along with rising inflationary expectations in the United States, the picture emerging is that in which inflation may become an issue again for investors and central banks across the globe in the near future.
So far, we see that rising inflation in the US and in Europe is being driven by the rapid rise in energy costs during the past four quarters of 2016. Will the inflation uptick be sustainable if energy prices are taken down a notch, as we expect in Q1 2017? Given the single universal price of crude oil, will inflation rise faster in Europe relative to the US, or is it the other way around?
These questions are being asked as comparative inflation rates often play large roles in the USD-EUR relationship. During certain periods in the immediate past, inflation differentials were instrumental in driving the valuation of the USD versus the euro, as much as interest rate differentials did (see chart below).

https://staticseekingalpha.a.ssl.fas...rId7_thumb.jpg
Inflation has been relatively higher in the US since early 2015, but the lower EU inflation rate since then did not help the common currency as swap and yield spreads predominantly favored the US Dollar over the euro at that time, a condition which still persists today. But as the chart above shows, relative inflation rates played a major role in the EUR-USD relationship during the period up to Q2 2014. During those earlier periods, the higher inflation rates in the US were part of the reasons why the US currency was weaker versus its EU counterpart (see chart above).
Then by late 2014, the interest rate spreads turned massively in favor of the US Dollar as the ECB aggressively eased monetary policy. In fact, it was the sharp decline in inflation (actual and expected) which drove the ECB to engineer a rapid decline in interest rates, which subsequently brought about a persistent decline in the valuation of the common currency.
Nonetheless, there is now a growing gap between the inflation rates of the two regions as US inflation rates rise sharply, as shown by the chart above (red line). Although inflation as a valuation factor has been overshadowed by the overwhelming impact of rate differentials favoring the US unit, there would come a point where significantly higher inflation rates in the US would start to hurt the USD and weaken its valuation against the euro.
It also helps that with domestic inflation rising quickly, the change rate of Germany's bond yields is stabilizing. Germany's balance of payments Capital Account is also starting to rise, suggesting that investment capital which fled the Eurozone is starting to be repatriated, and should help strengthen the common currency in the near future (see chart below, green line).

https://staticseekingalpha.a.ssl.fas...rId8_thumb.jpg
There is this persistent belief in the markets that higher long-term interest rates (the 10yr yield as proxy) pushes up the value of the US dollar. This belief is misguided. That has not been true since global finance came out of the Great Financial Crisis (GFC) of 2007/2008 during Q2 of 2009. Since then, changes in the US Headline CPI have been ahead of the changes in the 10-year yield and the US dollar. The new comovements post-GFC: changes in CPI are positively correlated with, and lead the changes in the long bond yield, and changes in both CPI and 10yr yield lead the negative changes in the US dollar.
These post-GFC relationships have held true even in the periods before, during, and after the Fed tightened policy in December 2015. It remained the case until late August 2016, when the US Dollar started to strengthen even as the CPI and the 10yr yield rose (see chart below).

https://staticseekingalpha.a.ssl.fas...rId9_thumb.jpg
The inflation situation in the US is, and has been, significantly different from that of the eurozone's. US Core CPI has been sideways since February last year, after a sharp push in most of 2015, bringing the index above 2.0%. The Fed targets the Core PCE's change rate, which is still slightly below the Fed's target of 2%, but the recent high energy prices will soon percolate into the PCE, and we expect the Fed's inflation target to be met by 3Q 2017 (see chart below). This outlook contrasts sharply with that of the Eurozone - the ECB predicts euro-area core inflation won't reach their 2% target until at least 2019.

https://staticseekingalpha.a.ssl.fas...Id10_thumb.jpg
Normally, we do not invoke the Fed's and ECB's inflation targets in a discussion of relative currency valuations, as both central bank's core inflation targets have been similar in recent years. But the recent schism shown in the US Headline CPI-long bond yield-US Dollar relationships may have its origin in developments in the core inflation universe. It turned out that there is a new player in the inflation Index, long-term rates, and US Dollar triangle - the US Core PCE Index (less Food and Energy components).
Unlike the leading function of the US Headline CPI on US rates and the US Dollar, the Core PCE tended to lag behind developments in rates and the US currency. But that has changed in July when the Core PCE monthly changes started to fall sharply even as corresponding monthly changes in rates and the US Dollar rose sharply (see chart below).
The divergences we saw in the Headline CPI relationships, and now in the Core PCE comovements, led us to believe that the long bond yield rally was driven primarily by the sharp rise in CPI, while the sharp ascent in the US Dollar was impelled primarily by the aggressive decline in Core PCE inflation. Those developments make sense if considered separately, but based in the context of recent relationships, they don't if taken together. The most puzzling of all - the positive correlation between the long bond yield and the Core PCE has completely broken down (see chart below).

https://staticseekingalpha.a.ssl.fas...Id11_thumb.jpg


Snippet: Conclusions !!!

Conclusion:
There is evidence from academic work that the negative correlation between crude oil and the US Dollar flows from the former to the latter (e.g., Coudert, Mignon, Penot, 2005). We can also show empirical evidence that this is indeed the case based on our studies, and we have shown that in a previous Seeking Alpha publication as well (see that here); the correlation may also be seen in the two subsequent charts below.

https://staticseekingalpha.a.ssl.fas...Id12_thumb.jpg
In fact, we believe this is the linkage leading to the negative correlation between the US Dollar and CPI inflation, headline or core. As we showed in the previous charts, inflation negatively leads the US Dollar, and since crude oil leads CPI, then the proper conclusion is that higher oil produces higher inflation, which tends to weaken the US currency. The outlook for near-term oil prices, on account of the OPEC and Non-OPEC agreements to cut oil production, is significantly bullish, as can be expected.
However, we believe that there are short-term negatives in the oil fundamentals, which may depress oil prices in early Q1 2017, but by mid-year, the production cuts should start to push prices higher. It may also be that severe Capex cuts in the past two years, and over the next coming years (up to 2020) should prime higher oil prices, with negative consequences to the US currency for some time (see chart below).

https://staticseekingalpha.a.ssl.fas...Id13_thumb.jpg
Our short-term outlook is for the US Dollar to strengthen until mid-February, after which the US currency should weaken significantly against the euro and other major currencies, given those relationships, and summarized by the chart shown below.

https://staticseekingalpha.a.ssl.fas...Id14_thumb.jpg
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

On that chart seems to be around 112.50. Which is also confluence with the yearly pivot.

https://www.armstrongeconomics.com/m...nuary-12-2017/

It was not a pretty site for most stock markets today with much of the mainstream media blaming Trump. The first press conference will probably be remembered for the resulting stock market volatility. As Asia opened the mood was heavy but having watched futures markets take much of the immediate repercussions cash tended to take a general drift lower. The Nikkei finished the day down -1.2% with both the Shanghai and Hang Seng closing -0.5% lower.

The JPY saw another 2 big figure range with Yen strengthening as cash closed weaker but saw the currency back to mid-range as Nikkei futures bounced along with DOW rallying over 100 points off of its low.

European cash also reacted to the late Trump press conference with all core indices trading lower at the opening. The FTSE was the only one that managed some form of bounce as the currency turned lower, mid afternoon. Sterling saw a 2 point rally early in the day but was back down to the 1.2150 level by late US trading. The rumored “interruption” only proved successful for a short time before the weight of the trend returned. The DAX, CAC and IBEX were down closing 1.1%, -0.5% and -0.1% respectively. Fiat was in the news for allegedly using software which may distort emissions release; a claim they deny and are prepared to defend. Regardless, the shares were initially hit 20% but recovered somewhat by the close. Changes mentioned in the ECB’s bond buying program (announced at the Dec 8th meeting) come into effect today tomorrow (Jan 13). They have announced that they may purchase yields lower than the depo rate (-0.4%). Worth keeping an eye on the front end as bonds start to sell-off.

All indices traded weaker in the US too today with the NASDAQ also taking a rest. Having seen positive gains day after day we finally saw the NASDAQ fall for the first time this year. However, even though the broader markets were heavy they closed off of their lows with the DOW recovering much ground into the close. The USD clawed back much of yesterdays losses and was last seen at 102.45. The VIX bounced 1.25% also as speculators pay for cheap volatility.
As stocks bounced so the treasury curve steepened with 30’s underperforming the belly. 2’s eventually closed 1.17%(-2bp) and 10’s at 2.36% (+0bp); 30’s closed 2.96% (-4bp). German 10yr Bunds closed 0.31% (-1bp) with the spread US/Germany closing +205bp (+1bp). Italy 1.89% (+3bp), Greece 6.77% (+1bp), Turkey 11.21% (-36bp), Portug 3.87% (-7bp) and Gilts 1.30% (-4bp).

Tomorrow all eyes will be on the US big banks as they report earnings, which could get the trend rather than currency for a change.

piphunting

Thank you for posting and thanks for your excellent chart. I included it on my TEST QUESTION Thread.

What my objective is in asking this question of those that use charts and almost everyone uses charts of methods such as Supply and Demand. Support and Resistance. Elliot Wave. Pivot Points. All these have one thing in common. They give you insight into where Forex currency pairs or Commodity currency pairs will go. Trading Stocks , Equities is different from trading commodities leveraged at around 30 to 1 and the most leveraged of all is of course Forex at 100 to 1.

There has to be more certainty to trading at least for me. I cannot deal very well with failure and if I had to start trading each day with doubt and guessing or hoping then I would be in another business. We KNOW with almost 90% certainty where USD/JPY will be when Dow Jones 30 or US 30 which is the symbol for what is my KEY TRADE PLAN until March 31, 2017.

To continue with CERTAINTY there is no possibility that US 30 will NOT GO below 19,000. Knowing that and wanting to make Major Profits all that I need to do is go SHORT US 30 and by having a foolproof method of controlling Risk if followed then for every 100 Points of Drop on US 30 with a position of 100 Units risking $1100 US Dollars as I did today in real time my profit was $1105 US Dollars. I exited because I did not have the time today to keep lowering my LIMIT OUTS and furthermore I was happy to put the $1105 US Dollars in the bank. That part is called Control of Greed. To conclude my remarks I trade to make money and if I cannot with certainty then this is not the business for me or anyone.

As I always say FEEDBACK is great because then we understand each other's thoughts and can strengthen our knowledge.


Benjaminis

I post this again so there is NO DOUBT on How To Trade Forex and Earn Money and Protect Your Capital.

Once again , I try hard for everyone to understand all the parts that would guarantee your success if you have the necessary skills and DISCIPLINE. I can not guarantee that you do however I will know for sure by your Forex Trading results. It is up to you not myself as I have done my part and at least three of our Forex Traders are learning well. The three that are working on it and participating. IT IS THAT SIMPLE and that has too be clear so JUST DO IT !!!


Benjaminis

I first want to talk about having an EDGE. Fundamentals by themselves is not an EDGE. However using Money Flow between Asset Classes from here on I will include in my basket of 100% of what a winning Forex Trader needs. I will not refer to it as a fundamental anymore since new people coming to this thread put my method as including Money Flow as a fundamental which it actually is however not in the same way as most people understand Fundamentals.

This week we will get to see Non Farm Payroll (N F P) and as any experienced Fundamental Forex Trader knows it usually is a fantasy number created by the BLS however next to a FED rate announcement it is the one number that can move markets hundreds of PIPS in seconds and minutes.

Whatever the number Trillions of Fiat Currencies and other Asset Classes will start to change values as we "SEE" the Money Flow. That is why I call it my EDGE and once you know it and understand it well then it becomes your EDGE as well.

Here are the 5 important things that any Forex Trader that belongs to the minority of constant profitable Forex Traders , which I have named , The 5% Club needs to have. Of course in my opinion, I would think that very few Professional Forex Traders use the EDGE. Of course when you know about it then anyone can use it.

Each of the following five important things which I have given a weighting of 20% to each makes up what a profitable Forex Trader needs to have in order of IMPORTANCE.

(1) The ability of the Forex Trader to control their FEAR and their GREED and their EGO. Perhaps the last one is the most important of the three since the MARKET is always right. Using Money Flow puts you with the Market instead of against it as your Forex Account keeps losing the value in it.

The reason that I teach Forex Traders whether experienced or new to Forex trading with a $50,000 US Dollars Demo Account is because that is how I learned my trade starting during 2003. By learning to trade with $50,000 US Dollars in Demo Funds, then I had no FEAR or GREED. However after 3 years of Forex Demo Trading I surely had EGO since month in and month out my Return On Investment (ROI) was constantly over 10% a month or 120% a year.

(2) Money Flow. I have now explained why.

(3) Risk Management. That is next to Money Flow the KEY element of my Forex Trading since when you blow your account whether you are trading with too little capital as the majority of Retail Traders are or because of a Black Swan event such as Brexit or Europe banking issue such as we have in Italy at the moment or the Swiss Central Bank as they did a few years ago say one thing and then next moment announce a major change in their policy and 500 PIP movements happen in seconds. The absolute MINIMUM Forex Account that I would and could trade with would be $10,000 US Dollars. I would be glad to answer questions as to why although most will understand. What if you do not have $10,000 US Dollars trade with ? Prove to yourself that you have the skills and the knowledge to trade with profits then you will have no problems finding funds to trade Forex with. After my 3 years of Forex Demo Trading, I went out and found 6 clients that first deposited initially $50,000 US Dollars and within 3 months along with the profits that I was generating in my first three months of Forex trading from March 2006 to June 2006, I was managing well over $100,000 US Dollars.

(4) Technical Indicators which includes all parts of it whether Support and Resistance or Supply and Demand or Pivot Points. I use when I do daily trades the 5 Minute Charts along with the 15 Minute Charts and 30 Minute Charts to go along with the 4 Hour Charts. When you toss a rock in the river the first ripple is the 5 Minute Chart and then on to the 30 Minute and the two others. I use other indicators aside from the standard ones which are SAR and Fractal and Awesome Oscillator. The most important one that I look at when I enter into a Forex Trade is Support and Resistance so if I am going long or short I enter either at the TOP or BOTTOM of the Chart that I am using. Of course my Risk Management protects me from Human Errors or EGO.

(5) Fundamentals. I am fairly sure most of those reading my words today or whenever they read it might be surprised how a Forex Trader such as myself who posts a tremendous amount of research can list fundamentals as number (5) in order of importance. It is the research that allows me to clearly understand the difference between PERCEPTION (Markets) and REALITY (Research) Then I know what will most likely happen in the future and I am better prepared to deal with it.

I hope that this post of my daily Morning Thoughts answers some of your questions both for the 12 Forex Traders using the $50,000 US Funds Demo account with FXCM UK or anyone else. There is no reason that an experienced trader reading this thread or anyone else to not open a $50,000 US Dollars FXCM UK account so they can use the knowledge that we share here to learn new things and try them without having any FEAR of LOSS !!!

As always , I look forward to feedback and thoughts and anything that you care to share with us on our Thread.

http://www.zerohedge.com/news/2017-0...ops+to+zero%29



Snippet:
By Robert Huebscher of Advisor Perspectives
Investors will confront excessive debt, high P/E levels and political uncertainty as they enter the Trump presidential era. In response, according to Jeffrey Gundlach, U.S.-centric portfolios should diversify globally.

Gundlach is the founder and chief investment officer of Los Angeles-based DoubleLine Capital, a leading provider of fixed-income mutual funds and ETFs. He spoke to investors via a conference call on January 10. Slides from that presentation are available here. This webinar was his annual forecast for the global markets and economies for 2017.

Before we look at his 2017 predictions, lets review his forecasts from a year ago. His two highest conviction forecasts were that the Fed would not raise rates more than once, despite the Feds own predictions, and that Trump would win the presidency. Both predictions were accurate.

But he was also downbeat on emerging markets, and singled out Brazil and Shanghai as likely underperformers. Brazil turned out to be the best-performing emerging market last year, gaining 69.1%, but he was correct about Shanghai, which was the worst performing market, losing 16.5%.

Gundlach said he had a low conviction prediction that the yield on the 10-year Treasury would break to the upside. It began 2016 at 2.11% and ended at 2.45%. He said the probability was that U.S. equities would decline in 2016, yet the markets gained approximately 13%. Gold, he said, would hit $1,400 at some point in 2016. It began the year at approximately $1,100, hit a high of $1,365 during the summer and closed at approximately $1,150.
Lets look at his forecasts for 2017, including the one which he called the chart of the webcast.

Doomed by debt?
The U.S. household debt-servicing ratio is at its lowest level since 1980, according to Gundlach, despite what he called an explosion in private-sector debt. That ratio would change adversely if rates rise, he cautioned, although that might be offset by an increase in income.

Public-sector debt is at 75% of GDP, not including the portion of the debt owned by the Fed, he said. Gundlach has warned of fiscal debt problems, as he has done in the past, but pointed out that since 2011 federal debt has leveled out as a percentage of GDP. But he warned that Trumps policies would lead to a steeper slope upwards as compared to the congressional budget office (CBO) debt projections, which show a 141% debt-to-GDP ratio by 2046.
Trump may deliver the tax cuts he promised to the rich in return for infrastructure and defense spending, Gundlach said, and that would lead to structural debt problems it would get us to the 141% level sooner than in 2046, he said. Those spending initiatives will not kick in this year, he noted, and might take as long as two years to get going.

Gundlach offered data showing that the deficit will increase faster than it has in the post-crisis period, although those projections were made prior to Trumps victory, and that the portion of the deficit allocated to mandatory (entitlement) spending has grown steadily over the last 50 years.

The recession watch
The historical pattern has been that a recession has occurred during the first term of a new president, especially when following a two-term presidency. But Gundlach said that the leading economic indicators (LEIs) are positive, and there has never been a recession without those indicators going negative. CEO confidence is moving up and consumer confidence is exploding, he said, which further supports his prediction that a recession is not imminent.

President Trump will lead to a breakout of the forever 2% GDP growth we have seen for six to seven years, Gundlach said. Animal spirits have been stirred. He noted that a small-business sentiment report released that day was the most bullish it had been in a long time.

I guess optimism is infectious, he said.

He also relies on comparisons of the unemployment rate to its moving average as a recession warning. He said those metrics are not signaling a recession either. He added that the PMIs are saying that the pattern of recession is being avoided.

Inflation
Investors should brace for moderately higher inflation. Inflation indicators, other than the PCE, are in an uptrend, he said. The internet-based PriceStats gauge is exactly in line with the CPI, and the ECRI inflation metric corroborates the rise in inflation. In response to some analysts who recently predicted a bond-market rally, Gundlach said, A forecast of a 1.5% 10-year yield looks awfully shaky.


The inflation break-even rate, based on the difference between nominal Treasury and TIPS yields, is at 2%, its highest level since late 2014. That seems like a reasonable price he said, and TIPS and nominal Treasury bonds are fairly valued with respect to each other.

Short term rates are heading up, including LIBOR. The 2% implied inflation forecast is for the next five years, which he said was possible but higher inflation is more likely. Average hourly earnings and overall wage growth are rising in the U.S., Europe and Japan, he said.

Commodities put in a massive double bottom in January of 2016, Gundlach said, and gold bottomed in December of 2015; both are rising now. He said he has advocated a permanent gold position since 1990, although he is not wildly bullish on it, particularly following the Trump victory. Copper has fallen recently, which supports the modest bond rally that has occurred since mid-December. Oil inventories are very high and that is why Gundlach thinks $70/barrel oil is unlikely. Oil prices will vacillate between mid-$40s and high-$50s, he said.

But the biggest story about inflation is in Germany. Below is what Gundlach called the chart of the webcast:
http://www.zerohedge.com/sites/defau...06022611_0.png
For a long time, German inflation was at or below the yield on its sovereign 10-year bond. But this chart shows that German CPI is now 1.7%, its highest level in 16 years. Yet the chart shows that the 10-year Bund yield is a mere 25 basis points, implying sharply negative real yields.
Gundlach asked, rhetorically, how German yields can stay at that level with this much inflation. Bunds, he said, are vulnerable.

The Fed
Gundlach predicted that the Fed would not raise rates in March, but would in June and probably again later in the year. He assigned a 50% probability to a third rate increase.

Since 2014, the Fed has been systematically reducing its projections of where short-term rates would be in 2017, according to Gundlach. Late last year, when inflation was starting to increase, the Fed was at its lowest projection.

As a result, a narrative is developing that the Fed is behind the curve with respect to raising rates, but Gundlach doesnt think so. He said that lower rates will help finance the big infrastructure bill that is coming.

Gundlach cited academic research that claimed to show that the Fed Funds rate would have needed to be at -3% to achieve the same effect as the quantitative easing (QE) programs it followed in the post-crisis period. Since it is no longer engaged in QE, it is effectively tightening at approximately that 300 basis point rate, and that policy has led to recessions in the past. But he cautioned against making too much of an inference from that research, because rates are at a different (lower) level that at the time of prior recessions.

Bond market projections
The 10-year closed at 2.38% on the day he spoke. He said it will go below 2.25% but not below 2% in the current rally. Analysts forecasts for the 10-year yield have been consistently too high over the last five years. Now forecasters are predicting a flat year, but Gundlach had a different view.

I think rates are going to rise in 2017, he said. For sure rates are going to rise.

Moreover, as he said in his prior webcast, if the 10-year yield surpasses 3%, the bond bull market is over from a classic chart perspective. He said that would also mean trouble for equity markets.

Gundlach noted that another prominent bond manager had made the same prediction, but said the threshold was 2.60% instead of 3%. But Gundlach pointed out that the yield had already reached 2.64% last year. He did not name this manager, but it almost certainly was Bill Gross.

In the short-term, though, he said, We are going to see another leg up on bond yields after this rally.

Over the medium term, Gundlach said the 10-year yield could hit 6% in four years, about the time of the next presidential election. He noted that inflation and economic growth are already at levels similar to 2006, when interest rates were at 6%. A move to 6% would not be bad for bond investors, he said, given the opportunity to reinvest coupons at higher yields, and returns might be similar to what investors would have received on a stagnant 1.5% yield.

Junk bonds are way off their highs, Gundlach said. They did great until mid-December but now are muddling along. Many investors think that because high-yield debt ended 2016 at a high price they are not vulnerable to an interest rate increases, he said. But that is incorrect, according to Gundlach; if rates move higher, high-yield bonds will not go up in price because spreads have already tightened. The high-yield ETF JNK tracked the S&P 500 in 2016, but that will not repeat in 2017, he said. In 2016, credit spreads drove prices; now it will be interest rates.

Gundlach said he is neither bullish nor is he bearish on the dollar. The dollar will be supported by Fed rate hikes, but Gundlach doubted that the dollar (based on the DXY index) will go above $120 (it was at $102 on the day he spoke). Trump understands that a strong dollar sounds better than it actually is, Gundlach said, and that influences his dollar forecast, which is in opposition to the consensus, which favors a stronger dollar.

The ratio of copper-to-gold prices is a fantastic coincident indicator of the economy and interest rates, Gundlach said. If copper keeps softening or gold goes up, it will support a bond rally in the short term.

Investment recommendations
Diversify outside of the U.S., Gundlach said. Usually analysts call for this following rallies outside the U.S., he said, which has not universally been the case. But the U.S. is richly valued and Gundlach said now is the time to look at other markets.

U.S. stocks are at a high level relative to earnings, he said. Analysts are expecting a 20% increase in earnings, which would be helped by Trumps proposed tax cuts, according to Gundlach. But there is a lot of anticipated profit margin expansion in analyst earnings projections, he said. Unless earnings really pick up, he said, there will be a problem.

Wages have picked up and the gross operating surplus across corporations has gone down, he said. The Shiller CAPE is getting near its 1929 levels, fueling his believe that that the U.S. is richly valued.

Gundlach noted a few markets that he liked and a few he didnt.

He favors India, which has been one of his picks for the last several years for long-term price appreciation
Mexico is massively exposed to a potential tariff increase, he said, since 80% of exports are to the U.S. I am not fond of Mexican investments given that uncertainty.

Given his neutral outlook on the dollar, he recommended an allocation to emerging markets. He noted that the S&P 500 has been outperforming emerging-market equities over the recent past, and that a reversal of that trend is coming.

Gundlach also likes the Nikkei. He said that Abenomics is supportive of Japanese equities through automatic buying by the Bank of Japan. That policy is shrinking the Japanese market by 6% annually, he said. The yen will weaken more, so investors should hedge their currency exposure, according to Gundlach.
But Gundlach doesnt recommend Europe because of election risks in France and the Netherlands. It is a bad bet to expect the populism trend to change, he said. There will be trouble in the next year.

VERY IMPORTANT ARTICLE - PLEASE READ AND PRINT OUT AND REMEMBER WHAT IS BEING SAID !!!

https://dailyreckoning.com/be-prepar...y+Reckoning%29

Snippet:
https://dweaay7e22a7h.cloudfront.net...al-650x360.jpg
https://dweaay7e22a7h.cloudfront.net...esRickards.jpg
BY JAMES RICKARDS
POSTED
JANUARY 12, 2017


Be Prepared for a Violent Fed Reversal


The outlook for rates has taken what I call a U-turn. Theres very little doubt that the Fed is on track to raise rates. This outlook is not in response to any particular piece of economic data or the overall economic picture. In fact there are plenty of arguments why the Fed should not raise rates based on economic fundamentals.


However, they have a separate agenda which is that the Fed has committed, what I think will be viewed in hindsight, as a historical blunder by missing the opportunity to raise rates in 2010, 2011, 2012. That was when the economy was growing, not strongly but those were the early stages of the expansion.

The economy was growing well enough then to justify rate increases. If the Fed had normalized rates in 2011-2012, between 2 2.5%, they would be in a good position today to cut rates if necessary to fight a recession. Unfortunately they did not do that. They missed an entire cycle while experimenting with Ben Bernankes quantitative easing, which in hindsight will turn out to be a real mistake by the Fed.


Now theyre in the position to move rates after the eighth year into the recovery. While this has been a weak recovery, and people are still struggling with part-time employment, or cant launch careers on top of other difficulties, this recovery technically started in June of 2009. This makes for a very long recession by historic standards. More than twice as long as the average expansion since World War II, and comparable to the very long expansions weve had since 1980.


Were closer to the end of this cycle than the beginning. The Fed is concerned that if another recession started tomorrow (and Im not saying it will, but it could) it would have no ability to cut rates.


While they currently have rates at 50 basis points, the Fed could only do two cuts until it was back to zero. This would force the decision to begin talking about negative interest rates. The Fed leadership wants to get rates up to 2 or 3% before any potential recession starts, just so they can cut them.


The problem is, how do you raise rates to that level? How do you raise rates to 2 or 3% without causing a recession that youre trying to prevent? Thats what I call the Feds conundrum, and thats exactly where the Fed is now. Is this a good time to raise rates? Probably not, but they are going to try to do it anyway.


The Fed has said theyre on track to raise three times this year. The market doesnt believe it. The market is counting on maybe two rate hikes at most, but not three. My expectation right now is that the Fed will raise rates in March.


First, they have a bias towards raising rates. The Fed is not neutral. The threshold is fairly low. They feel that its mission accomplished on the job front; unemployment is 4.7%, were continuing to create over 100,000 jobs a month. Thats not the 2 or 300,000 jobs that we were creating a year to year and a half ago. It is still positive job growth, and with unemployment low and this rate in expansion, thats good enough.


Second, the Fed is concerned about inflation. The Fed believes that monetary policy acts with a lag. This means if you think inflation is coming, and expectations are going up, you need to raise rates now because it takes about a year for increases to have impact. They dont want to get behind the curve.

While unemployment is low, together with other factors, the Fed applies whats called a Phillips curve for analysis. While I personally dont put much stock in the Phillips curve, it is worth analyzing to understand what the Fed does in order to forecast policy. If the Fed believes Donald Trumps policies will be stimulative, while unemployments 4.7%, a standard Phillips curve for analysis would tell them that inflation is going to pick up late this year. This indicates that they should raise rates now to stay ahead.


The Feds got a conventional macroeconomic reason to raise rates, which is based on a Trump stimulus. They also have a bias towards raising rates because they shouldve raised them five years ago and didnt. For those reasons, I put them on track to raise rates now in March.


Now the market doesnt expect this, or at least it is not giving that a lot of weight. The probability based on Fed funds futures is below 50%, so what the Fed will try to do over the next month or so is to steer expectations. The way they do this is leaks to the press, speeches and commentaries. Expect that to play out over the next month or so to try to get expectations up where the rate hikes not a shock.


Heres where the U-turn comes in. If the Fed raises rates in March, which I expect right now, the economy is fundamentally weak.


Here youve got the Fed trying to lean into stimulus, biased in favor of rate hikes at late stages for the economy. The stimulus might not be that stimulating. You could have a combination of the Fed raising rates, the Trump plan not producing that much stimulus, and the Fed raising into weakness and throwing the economy into recession.


If that happens, the stock market will fall out of bed. This wont tomorrow, by the way; this is something I expected to play out over the course of time.


The Fed will have to have to reverse course, which theyve done eight times since 2013. This is a recurring pattern. It will talk tough, raises rates, the market will fall out, the Fed will back off, go dovish and then apply forward guidance.


You get a U-turn pattern with the stock market, with interest rate markets, etc.

My short-term expectation is the Fed will raise rates in March. My intermediate-term expectation is that the market is going to be disappointed with the stimulus, the Fed tightening is going to be at the wrong time, the stock markets going to fall out of bed, the economys going to slow down, and the Fed will have to go dovish.


At that point youre going to see rallies in bonds, rallies in gold, and a decline in the stock market. Right now we have the opposite of that. Gold has a lot of headwinds, bonds have a lot of headwinds, and the stock market obviously has been booming since the election, but all of that could reverse.

Weve seen this movie before.

Kind regards,
Jim Rickards
for The Daily Reckoning



Is James Rickards Right About A Coming Monetary Apocalypse?

http://www.forexfactory.com//1.grava...s=400&d=mm&r=g

Ralph Benko ,

CONTRIBUTOR

Here you will find a political Secret Decoder Ring.

Opinions expressed by Forbes Contributors are their own.

Is a monetary apocalypse imminent?


James Rickards, bestselling author of Currency Wars, has a new New York Times bestseller out, about the possible imminent collapse of the dollar: The Death of Money: The Coming Collapse of the International Monetary System (Portfolio/Penguin). More interestingly, he writes about what could come next: a golden age.
Advance praise (“A terrifically interesting and useful book….”) from Brookings’s senior fellow Kenneth W. Dam, former Deputy Secretary of the Treasury and author of The Rules of the Game: Reform and Evolution in the International Monetary System, is an attention getter. Rickard’s Currency Wars was a hot best seller on the New York Times list, and also, more significantly, in the United States Senate.
http://blogs-images.forbes.com/ralph....jpg?width=960
James Rickards

https://www.federalreserve.gov/newse...n20170112a.htm

THE SPEECH BY HEAD OF THE FED (Federal Reserve) Janet Yellin

Speech

 

1. 28 KB PDF

Chair Janet L. Yellen

At the Conversation with the Chair: A Teacher Town Hall Meeting, Washington, D.C.

January 12, 2017

Welcoming Remarks
https://www.federalreserve.gov/newse...intexticon.gif Watch Conversation with the Chair: A Teacher Town Hall Meeting with Chair Janet L. Yellen

Thank you, and thank you to all the educators who have come to the Board this evening or travelled to one of the Fed's regional Reserve Banks to watch and listen via the webcast.

I am very much looking forward to hearing from you about teaching economics, and I am eager to respond to your questions. For that reason, and also because I expect that school starts very early tomorrow for many of you, I will try to keep my remarks brief. But I do have a message to impart about the work you do, which is vitally important not only to your students, but also, I believe, to the world they will soon inherit and even to the mission of the Federal Reserve.

First and foremost, of course, like all teachers, you are helping prepare your students for successful and rewarding lives. The knowledge you impart and the intellect and talents you help develop are powerful tools your students can use to build those lives. Like some other subjects students encounter in school, economics teaches analytical and critical thinking skills that can aid in the development and success of anyone. Part of success for your students is economic success--as capable, creative, and productive members of the workforce and as consumers adept at managing their finances. Economics provides knowledge and skills of practical use in college and in the workplace, and it also provides skills to plan and make wise financial decisions, which are some of the most important and consequential that we face in life.

Your students benefit very directly from this education, but so does everyone else in society. Everyone is engaged in and depends on the economy, and nothing is more critical to a healthy and growing economy than the capability, creativity, and productiveness of its workforce. Whenever I am asked what policies and initiatives could do the most to spur economic growth and raise living standards, improving education is at the top of my list.

In addition to the role you play in preparing students for jobs and careers, you also help prepare them to be responsible consumers. The economy needs productive workers, and it also depends on consumers, whose individual spending decisions, as most of you surely have taught in class, collectively account for two-thirds of economic activity. Consumers skilled in managing their finances are better prepared to weather bad times, and stronger household finances overall can help sustain growth, stabilize the economy, and mitigate an economic downturn.

Stabilizing the economy and mitigating a downturn, of course, also happen to be among the Federal Reserve's primary responsibilities. When successful, monetary policy can be a powerful and effective tool to these ends, but its capabilities are dwarfed by larger factors such as the productivity of the workforce and the strength of household finances. By educating students and directly supporting their contributions to the economy as producers and consumers, all teachers, especially teachers of economics, are effectively furthering our mission at the Fed, so let me offer my thanks for making that job a little easier.

To help support your important work as teachers, the Federal Reserve Board and the 12 Reserve Banks conduct programs, organize events, and publish books and other materials to spread knowledge of the role of the Fed--and economics in general--and to promote financial literacy. Before I get to those events and programs, let me say a word about what is probably the most important pedagogical aid that the Fed produces--the 182-page book called The Federal Reserve System: Purposes and Functions. The 10th edition of Purposes and Functions, published in October of last year, offers a detailed and comprehensive account of what, why, and how the Fed carries out its different responsibilities. I think it is a wonderful resource for teaching about the Fed, and copies are available via the Board's website.1

Each of the Fed's Reserve Banks has community outreach and educational initiatives in the areas of the country they serve, and the outreach to economics teachers is coordinated by the group chaired by Amy Hennessy, the Federal Reserve System Economic Education Group.

At the Board, we have for some years operated a program called FedEd, which sends Fed employees into schools throughout the Washington, D.C., metropolitan area and sponsors events for students here at the Eccles Building.2 FedEd's outreach to schools depends on the time and sacrifice of several dozen research assistants, who are typically recent college graduates who work for two or three years at the Board. Research assistants who volunteer for FedEd visit schools; help teach about the Fed, economics, and finance; and answer questions about work opportunities at the Board. The Federal Reserve is committed to promoting diversity in our ranks and in the economics profession, and FedEd has furthered these goals by making sure to include schools with significant numbers of minority students.

This past school year, FedEd sent research assistants into nine different schools and FedEd volunteers have visited 38 different schools since 2012. FedEd was back in schools last fall, drawing from 48 research assistants who volunteered to participate. FedEd also sponsors several speaker events a year that bring students into this Board Room. Students recently heard a presentation from Scott Alvarez, who oversees the Board's Legal Division, and, in February, Vice Chairman Stanley Fischer will speak to students at another event. FedEd is overseen by two research assistants, Caroline Shinkle and Jamie Lenney, along with Karen Pence, who is an economist at the Board. All three are with us this evening and prepared to answer further questions about the program.
Online resources for teachers can be found on the Board's website at federalreserve.gov, and additional resources available throughout the System are at federalreserveeducation.org https://www.federalreserve.gov/gifjpg/exitIcon.gif. The websites include videos in which policymakers and the staff describe the Fed's functions. Also, the sites include historical materials and a wealth of information related to the financial crisis and the Fed's response.

Let me leave it there, and again thank teachers for participating in this town hall, and offer my thanks, on behalf of the Board of Governors, for the valuable work you do every day. I would be very happy to respond to your questions.

1. Purposes and Functions is available on the Board's website at https://www.federalreserve.gov/pf/pf.htm. Return to text
2. More information about FedEd is available on the Board's website at https://www.federalreserve.gov/about...-education.htm. Return to text


COMMENTARY FROM BENJAMINIS: I will search later tonight or in the morning for the questions asked her and her answers.

http://investmentresearchdynamics.co...ory-heres-why/

Snippet One:
I find it to be mind-blowing when financial advisors and stock market gurus get in bubblevision or write Seeking Alpha articles and assert that the stock market is good relative value right now. They are either dishonest, unethical or just stupid. Likely a combination of all three in varying degrees.
Heres a chart with which everyone is familiar:
https://i0.wp.com/investmentresearch...size=768%2C418
Based on that graphic, it looks like the current stock market is only the third most overvalued in history, right? WRONG.
The problem comparing the current p/e ratio of the S&P 500 with that of previous stock bubble tops is that the accounting used to produce the e is not comparable. Over time, FASB and the SEC have colluded to make it easier for companies to hide losses and report non-cash income as GAAP cash flow and earnings..


As an example, in 2010 FASB issued a bulletin which changed the way big Wall Street banks were allowed to account for bonds and other forms of debt issued by others that are held as assets. Originally, banks had to market their bond/debt/loan holdings to market and accrue any market to market gains or losses at quarter-end as either income or expense. FASB decided to let banks classify any and all debt as hold-to-maturity, and allowed banks to hold this debt at face (maturity) value without ever marking to market. Any debt that was marked below maturity value (par value) could be marked up to par and moved into a held to maturity account. By doing this, the banks created non-cash gains in these holdings that was counted as income. Banks hold $100s of billions in bonds/loans and, starting in 2011, this rule change allowed banks to create billions in phantom, non-cash income. This of course translates into lower p/e ratios.

Snippet Two:
Theres several areas of accounting over the years that have accomplished a similar feat for all publicly traded companies. The problem is that it has rendered p/e ratios over time incomparable. Of course, NO ONE points out this fact and certainly any Wall Street analyst would be fired if they went on a truth tirade.


The bottom line is that, looking at the p/e ratio graph above, we dont know how the current p/e ratio for the SPX compares with the p/e ratios at the market peaks in 2007 and 2000 and 1929.

What we do know is that the current p/e ratio is significantly understated relative to the p/e ratios in 2007 in 2000 because earnings are overstated relative to those years because of the accounting gimmicks that enable companies to boost GAAP non-cash earnings. It could be that the current p/e ratio is the highest on record if we could make an apples to apple comparison of p/e ratios across time. In fact, I would assert that applying standardized GAAP across time would prove that the current market is more overvalued than at any time in U.S. history.


COMMENTARY FROM BENJAMINIS: Have a Factual Look at what they did. First the link to FASB.

http://www.fasb.org/jsp/FASB/Page/Se...=1176156316498


http://www.forbes.com/2009/04/02/acc...reet-fasb.html

An Article from Forbes from 2009.

4/02/2009 @ 12:15PM
Mark-to-Messy Accounting Change

Mark-to-market rules on valuing assets have been softened. Expect banks, hard-pressed to right their balance sheets amid imploding markets, and their investors to cheer. Not everyone is so happy.


The Financial Accounting Standards Board voted Thursday to allow firms greater leeway in how they value illiquid assets. Currently, investments like mortgage-backed securities are priced based on their last sale. Since the seller is usually distressed and parts with their goods for a fire-sale price, all similar assets must be marked to a lower price.

Critics of this brand of fair value accounting, outlined in FASB rule FAS 157, say its crippled the banking system, forcing firms to continually write down the value of assets in the worst possible market conditions, regardless of whether or not theyre for sale. This, in turn, has put tremendous strain on balance sheets, forcing financial companies to hunt for new capital to make up for paper losses at a time when few investors are willing to put money into banks. The spiral devastated the industry.


As Forbes chairman and editor-in-chief Steve Forbes has noted in repeatedly calling for ending mark-to-market rules, of the more than $700 billion that financial institutions have written off, almost all of it has been book write-downs, not actual cash losses. Mark-to-market accounting is the principal reason why our financial system is in a meltdown. The destructiveness of mark-to-marketwhich was in force before the great depressionis why FDR suspended it in 1938. It was unnecessarily destroying banks, he says (see: End Mark To Market).


With the changes to rule 157, companies can now value the assets on their books as if they were unloaded in an orderly sale rather than dumped in a forced or distressed sale. The guidelines will apply starting in the second quarter, which began Wednesday.


Good news for these uncommonly bad times, which demand bold remedies. But the point of FAS 157, critics of its repeal remind us, was to avoid the kind of dot-com bubble, Enron-era mark-to-fiction accounting that artificially inflated the value of companies, leaving investors holding the bag when optimistic company guesses met real-world market pricing. [the changes] would basically give businesses more leeway to decide what they report is on their books.

That cant help investor confidence, says Espen Robak, president of Pluris, a valuation advisory firm. That means higher cost of capital for everyone.

The Center for Audit Quality, a Washington, D.C.-based nonprofit, has said that letting firms make more subjective valuations will reduce the transparency that investors seek and would have significant unintended consequences.

One of the inadvertent effects could be that current methods, based on recent transactions, are rendered incomplete, forcing firms to spend time and money trying to assess what they have on their books. Investors will have to increase their own due diligence because reporting would be less standard and some firms might be more optimistic than others. The ones who will benefit are the ones who push the envelope most, says Robak.


Another concern: The definition of illiquid markets isnt clearly outlined. This is problematic because so many different types of assets arent being traded much from municipal bonds to many types of complex financial instruments. The proposal is meant to help de-clog balance sheets by addressing the issues of certain unpopular investments, but it doesnt limit the scope of the rule change.


Others argue that a far simpler way to help banks meet their capital requirements is to simply lower the capital requirements explicitly, instead of implicitly doing so by letting them fudge the numbers. That approach has its own perils.


Accounting, in the end, is about judgments and assumptions and, ultimately, convenient fictions. Accountants dont determine the real price of anything. Only markets can do that. But they have to be functioning normally to do so. When they arent fair-value accounting does more harm than good, but when order returns, we will be reminded why we need it.

CLOSING COMMENTARY FROM BENJAMINIS: We can now see clearly and factually what the criminals have done. These are members of the USA Government which includes the House of Representatives and the 100 Members of the Senate and the President of the USA during 2008 whom I am sure you all know or have heard of. Then we add in the Private Banking Group led today by Janet Yellin and before her Ben Bernake ad before that of course the Maestro , Alan Greenspan.

This House of Cards is ready to collapse. Please if you want to understand more and it is not necessary unless you have an interest please ask any questions that come to mind. I have finished for today and now I wind down and prepare for tomorrow.

Good Day

Hope everyone is doing well.

I think it will look something like this. (Between 111.14 - 111.97)

With the money flow method it takes time and research to get to the big picture, the truth. Now all of the hours you have put into researching has paid off. Now that we have a sneak peak in the future, we know that the US 30 will fall and so will the JPY.

Now most of the work has been done and we just wait patiently for the price to get at a certain resistant levels to short in the trend's direction which is clearly down. Then the price will retrace again and we short again when we have our confirmation through technical analysis until something change then we re-evaluate our trading plan.

So before you enter any position you check for big news events, watch the US30, US Dollar index and US 10 Yr bond and they will tell you if we have risk on or risk off. When we have risk off you wait for confirmation to enter a position through doing technical analysis and then you must just act in placing a position with your SL and TP.

So now trading becomes so easy and very enjoyable.

Trading without fear really makes trading so much fun. The last 2 week has been the most fun I every had trading! And we also don't need to be greedy because the next trade is just around the corner.

< So before you enter any position you check for big news events, watch the US30, US Dollar index and US 10 Yr bond and they will tell you if we have risk on or risk off.>
KeepCalmfx, hello! I agree with you completely, we already have an algorithm for our trade!

Yesterday morning I added a position while it was risk off. I closed these positions before the news in a loss. Then I added another order just before I left the office, on my way home the market fell I was not in front of my Laptop to add additional positions, when I got home one of my positions on my MT4 account hit target of $ 700. I added another position, but then closed it as the market retraced. On my Trading station account I set the profit to $1500, when I got home I saw the position was still open and I watched it for a retracement to re-enter again. I added another position but realized then that most of the move was already done and took of both my position in profit. (I also noticed if I had kept the position on for the day and did not close them, I would have made a good profit. So want to try if I have positions on, to set the SL and targets and to leave it to give it time to evolve, especially to keep it on until +/- 7pm SA time.)

I then waited for the market to retraced and just before I went to bed added a position near the pivot level. Adding my SL and target.
I will leave this to either hit my SL or TP. I want to see if I can let the positions run more, making less trades but with bigger profits.

If the market retrace back to 19930 are, when I have a loss of +/-$500 I will enter another position and will set SL & TP, so as Davit say start building your position. Then when both my positions is in profit. I will look to enter my 3 position. Maybe then close my 1st position in profit and move my 2nd position to break even and add a 4th position on retracement.

I know about the news later today, but I have confidence on where I have entered my position and with my SL will not get hit, by having a SL of 100 pips gives the market some breathing room to do its thing and then eventually to go in the direction of our trading plan. If my SL gets hit, then so be, then I will enter another position at a better price. We don't know the future, but with our money flow strategy the probabilities is definitely in our favour. (For example I would not have entered last night if the retracement was not so big, because the probability of retracement to weekly pivot point would be much greater. now by entering at the pivot point after the retracement is a much better entry point I believe. Hope it makes sense. Comments welcome)

I made +/- 68 trades on my MT4 account the last 2 and half weeks where I had 46 profitable positions. +/- 67% success rate
I made +/- 47 trades on my Trading Station account, where I had 32 profitable positions. +/-68% success rate.

Lets see how the next two and a half weeks go.