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Macroeconomic Analysis And Trading Ideas

POV 4Y in a nutshell & what matters if you trade equity indicesThe following is just my point of view and not the single source of truth. Hence, I would appreciate any comment which would lead to a fruitful discussion. When you are trading equity indices, you are simply trading a bundle of cashflows (compromised by the companies within the index). If you are not a scalper (I am not) but rather a swing trader (what I try to do to finance my living/ family) you would do your analysis based on 4H, daily and weekly charts. But apart from that, the most important question is, is there any event, which affects the cashflows within the index. Then, is this effect temporary or permanent. Typical events which affects more or less all cashflows within an index: Interest rate (central banks) GDP (incl. e.g. unemployment rate...) Inflation (defines the price for goods, hence the cashflow) Costs (incl. e.g. workforce costs...) Solvency (i.e. of your customers and the solvency is driven by market liquidity and interest rates) Uncertainty (these are mainly political risks like war, trade war etc. but sometimes also natural disasters and usually temporary even if they last for 1-2 years) To better understand these cashflow drivers, lets take as an example - the DJ and lets walk through 4 years and a couple of events, which drove the ups/downs in the DJ (from my POV): When Mr. Trump won the election in 2016 he soon started to initiate a very important law, the corporate tax law . Which would reduce the corporate tax significantly, hence has a hugh positive impact on the cashflows. Today, companies profit significantly from the law and uses the profit to buyback own shares or just pay higher dividends. Many companies have chosen the first option, which has two effects: First, higher demand for the own shares (which usually increases prices) and secondly, every share which they buy increases the profit of the company since dividendes paid are paid to the company and increases the income of the company (cashflows from financial activities), which increases the value of the company. The market anticipated the new law and consequently increased the valuation of the companies, knowing (or betting) that the law would effect the cashflow positively and smooth out any overvaluation in the future. This explains why we saw such an increase in asset prices starting in July 2017 (6 months before the law would come into effect). This is why we have left the Obama-Trend Channel moved to the Corporate-Tax-Cut-Trend-Channel . Then two things happend at the same time , which was not anticipated by the market: Trump started a trade war with China in Feb. 2018 and the FED announced, that it would start the process of balance sheet normalization , hence reduce the liquidity in the market. Both have negative effect on corporate cashflows. At that time, nobody knew how much liquidity would be reduced by the FED, how many rate hikes we would see and how long the trade war would last and would the consequences would be. After 4 rate hikes and further escalation of the trade war, everyone in the markets was nuts. Apart from the fact, that sentiments were in panic modus due to uncertainty , you could not see such negative effects in the cashflow of the "healthy" companies, but companies with a lot of debt were in panic modus, because money became more and more expensive (keep in mind, we have a lot of zombie companies, i.e. negative cashflows. These companies hope to pay back the corporate debt with own share (actually they sell these share to us) or some of them really believe, they will become profitable in the future). On the peak of this panic modus Mr. Mnuchin organized a call with the CEO of the 6 major US banks . The day after, they started to buy like crazy (here I have to guess: probably Mr. Mnuchin told them, that the gov would increase the pressure on the FED to lower interest rates and that before the next election Mr. Trump would find a solution (interim solution) regarding the trade war.) During this 12 months many traders made a fortune or maybe have lost a lot, this mainly to uncertainty. So never underestimate uncertainty and try to keep calm. When the FED announced the end of the balance sheet normalization and induced afterwards USD 400 billion into the markets again, the current rally started, which was just shortly stopped by the coronavirus. In my opinion, the market (nobody want to say that) hopes, that Mr. Trump will be re-elected and that he is going to do even more tax cuts, this time for the middle class in order to boost demand, this would again lead us to a new trend channel: The "Corporate Tax Cut and Middle Class Tax Cut" trend channel. If he does not win the election, we would have again some uncertainty in the market. I focus on these above mentioned "cashflow drivers", but I do not care so much on all the little indicators (these may change sometimes daily/weekly. Nevertheless I have build a heat map, showing me, when to many indicators are declining). But I use also the technical analysis, especially to define when to enter a trade and when to exit a trade. And I am not always right, just recently I posted a trade (S&P) which proved how wrong someone can be (in this case I had underestimated the PBOC and the ECB). I hope you like my thoughts, if you disagree, just leave a comment and let's share our thoughts.
OANDA:US30USDEducation
by Chimbarosa
Week results - between Brexit the NFPThe main event of the previous week was not a meeting of the Bank of England or even a decision of the Fed (both the Central Banks left monetary policy parameters unchanged). This is not data on US GDP (annual growth rates have been the weakest since 2016: 2.3% in 2019 compared to 2.9% in 2018), but the coronavirus epidemic in China. Yes, so far the epidemic has been localized in China. But this is not easier. The magnitude of the coronavirus epidemic has already exceeded the 2003 SARS. And the World Health Organization declared the outbreak of coronavirus a global emergency. So last week, the markets were busy on the one hand counting the victims of the epidemic (more than 300 deaths and more than 15,000 cases), and on the other hand, counting the economic damage. China extended the New Year weekend for another week. That is, another week 2/3 of the Chinese economy will be closed. The magnitude of the losses is not yet clear, as the epidemic continues, but it is already clear that we are talking about tens of billions of dollars. The chances of China's GDP growth rate dropping below 6% now seem almost 100%. So the fears and concerns of the global recession have intensified. The Chinese stock market today is trading in a deep minus (about -8%) despite all the efforts of the Government and the Central Bank. Despite such a regrettable situation, trading is an opportunity that can and should be taken advantage of. For the long-term, it is worth selling in super bought stock markets, but in the medium-term and locally, the purchase of safe-haven assets (gold and the Japanese yen) and the sale of risky assets such as the Russian ruble look great. Actually, we voiced this plan last week, but as the epidemic grows, the relevance of our positions only grows. Another significant event of the past week was Brexit. On January 31, Great Britain officially left the EU. We already wrote that buying pounds remains one of the best trading opportunities at FOREX in terms of potential in 2020. Whether it is implemented or not will show the progress of trade negotiations between the UK and the EU. But if successful, a pound above 1.40 could very well become a reality. The upcoming week will be saturated with various kinds of macroeconomic statistics. But the main attention will still be focused on Friday statistics on the US labor market and NFP figures. Our thoughts and forecasts on this subject will be described closer to Friday. In the meantime, we continue to monitor the development of the epidemic and investor sentiment.
FOREXCOM:XAUUSDLong
by Trade24Fx
2
The epidemic continues, Carney's last word, Brexit dayAs we warned in our two previous reviews, investors relaxed clearly prematurely. Actually, the dynamics of underlying assets on Wednesday confirmed this. And the front pages of publications clearly indicate what investors should think and worry about now - the coronavirus epidemic. Yesterday we wrote that its scale has already exceeded SARS, and the epidemic is still in full swing. The number of deaths has already approached two hundred, and the number of cases is clearly aimed at overcoming the 10,000 mark. Meanwhile, analysts are accelerating the theme of global recession and coronavirus as a trigger. We already wrote earlier that there are prerequisites for this and current events are really great for the role of a catalyst. In general, our recommendations on buying safe-haven assets are still working and their decline on Tuesday was only a great opportunity for cheaper purchases. But back to the events of yesterday. The Bank of England left the bet unchanged. Since the price of the pound at the start of the day partially took into account a possible decrease in the rate, its increase upon the announcement of the decision by the Central Bank was an attempt to exclude this component from the price equation. Actually, our recommendation to buy the pound worked at 100%. For the current head of the Bank of England, Mark Carney, this was the last meeting. Already in March, he will be replaced by Andrew Bailey, who previously served as Executive Director of the British Financial Supervisory Authority. Well, do not forget that today is Brexit day. On January 31, 2020, Great Britain leaves the European Union. Note that Brexit was and remains the main driver of pound movements. Moreover, it is precisely the “soft” scenario that is being implemented. Recall that when the markets were just thinking about the possibility of a “soft” Brexit, the pound was worth 1.41-1.43. From this position, its current prices look like great opportunities for medium-term purchases with very ambitious goals. The US GDP for the fourth quarter was 2.1%. Overall expected as it was the final reading.
Long
by Trade24Fx
12
Markets calm too soon. Preparing for Fed's decisionDespite the fact that the coronavirus epidemic is in full swing (the number of deaths has already exceeded one hundred, and the number of infected has approached 5000), investors sighed with relief. The Fear Index (VIX) crashed 15%, safe-haven assets were down, and stock markets and oil were up. Since we still do not see reasons for optimism, our recommendations remain valid: we are looking for points for buying gold and the Japanese yen within a day, and we are selling the Russian ruble and stock markets in the medium term. As an argument, we will cite information from the head of the Medical School of the University of Hong Kong, Professor Gabriel Lung, who announced the data from which it follows that 10 times more people are infected with the coronavirus than is officially considered. According to him, in Wuhan alone, 25,000 people are infected with the coronavirus, and the total number is 44,000. He predicts that the number of coronaviruses infected in China will double in 6 days. If the markets decide to respond to this information, then we may well become witnesses of what happened on Monday. The only recommendation is that we recommend buying oil as a kind of hedge for other positions that are somewhat unidirectional regarding investor sentiment, as well as an independent, not hopeless position. Now everyone is fixated on one component of the oil market situation - demand. But there is still a suggestion. And in this regard, Libya sends a rather strong bullish signal to the market. We are talking about the possibility of an almost complete stoppage of oil production in the country. According to the head of National Oil Corp. Mustafa Sanalla in the near future production may be reduced to 72 thousand b/d. from the current 262 thousand barrels per day. Meanwhile, the main central bank of the world today will announce its decision on the parameters of monetary policy. With a probability of 87%, the bet will be left unchanged. At the same time, 13% of traders believe that the rate will be increased. Quite symptomatic is the fact that markets do not even consider the possibility of reducing the Fed rate. But unlike the ECB or the Bank of Japan, the Fed still has enough space for this to maneuver. So, they will almost certainly not touch the bid. So, all attention will be focused on the comments of the Fed. What are the plans of the Central Bank for 2020? How long will the money market continue to pump liquidity through repos? Answers to these and other questions can determine the configuration in the financial markets. Today we will not make plans and predict the reaction of the dollar to the outcome of the FOMC meeting. Our plan for working with this currency for today is to stay out of the market, study the position of the Fed and tomorrow will formulate a plan of work with the US dollar.
FX:USOILLong
by Trade24Fx
Central Banks weekly results, Coronavirus, Fed & BoELast week was marked by meetings of the Bank of Japan, Bank of Canada and the ECB. The first wave of decisions showed that the central banks are not yet ready for any changes in monetary policy. You can understand them: at the current rate of economic growth, raising the rate is impractical, and there is nowhere to lower it (at least in the case of the Bank of Japan and the ECB). ECB expected to detail the new monetary strategy but did not get it. According to the head of the Central Bank Lagarde, before November December 2020, it will not be. This week will be the second wave of meetings of the Central Banks. The Fed will announce its decisions on Wednesday and the Bank of England on Thursday. With the Fed, the intrigue is minimal, but there are doubts about the Bank of England - a number of analysts predict a rate cut. But we will talk about this closer to Thursday. The main global event of the past week was the coronavirus epidemic in China. The situation looks quite menacing. About 40 million people are limited in mobility. The tourist season is disrupted (all this happens at the height of the celebration of the Lunar New Year). Economists are only just beginning to calculate possible losses, but it is already clear that the damage will be very significant. But events are still only at the progress stage. It is very likely that this week will also be marked by growing fears in the investor environment in connection with the epidemic. We cannot but note that risky assets (primarily stock markets) are potentially under attack. But safe-haven assets, on the contrary, have good chances for growth. So this week we are again buying gold and the Japanese yen. In addition, we will continue to sell the Russian ruble: the formation of a new government, a hasty and generally dubious constitutional reform, the outcome of risky assets - all these are good reasons for the correction of the ruble. On Friday, January 31, Great Britain officially leaves the European Union. This is an occasion to recall the pound and its purchases. Recall, when the markets were just beginning to believe in the “soft” Brexit, the pound grew to the area of 1.41-1.43. Now it is becoming a reality, but the pound is quoted at about 1.31. Which in itself is a reason to think about buying it.
FOREXCOM:XAUUSDLong
by Trade24Fx
ECB strategy, record pessimism amid record greedYesterday, the ECB expectedly left the parameters of monetary policy in the Eurozone. This was predictable, so most were interested in the new strategy of the Central Bank. But Lagarde greatly disappointed the markets, saying that before November-December, one could not count on any clarity in this matter. Thus, the euro will not have to rely on support from the ECB in the foreseeable future. So the decline in the single European currency was quite natural yesterday. Not even Lagarde’s remarks on the fact that moderate growth was observed in the European economy did not help. In general, the euro continues to look attractive enough for sale. Increase pressure on the euro and sales in the EURJPY pair, which we recommended selling the pair when it was quoted above 122. PricewaterhouseCoopers recently announced the results of a survey of heads of major world companies. We have already analyzed the results of a similar survey from Deloitte and note that PWC confirmed the previous results: the business is experiencing record pessimism since 2009. Only 27% of company heads expect improvement in the economy. Most expect a slowdown in the global economy. Characteristically, the most pessimistic leaders in the United States. Which once again convinces us of the correct course on sales in the US stock market. Meanwhile, the fall of the Chinese Shanghai Composite Index by 2.8% on the last trading day before the lunar New Year, was the largest drop in eight months. Naturally, with such a level of pessimism, purchases of safe-haven assets look great. So today we will continue to look for points for buying gold and the Japanese yen. Again, the epidemic in China is in the process of development: the second large city, Huanggang (population about 11 million people), has been closed for entry and exit. Railroad interrupted with the city of Ezhou. Friday promises to be a rather volatile day. Data on business activity indexes for the Eurozone and selected European countries, as well as the UK and the USA, coupled with statistics on retail sales in Canada, practically guarantee that it will not be boring.
Short
by Trade24Fx
Central Banks week and the IMF head expects a crisisMonday turned out to be a fairly calm day for financial markets. The reason on the surface is a day off in the USA. So today it will almost certainly be more volatile and interesting. The Bank of Japan set the pace to the news background early in the morning. Monetary policy parameters were left unchanged. The press conference will be somewhat later than the publication of this review, so if any interesting details come up, they will talk about them tomorrow. Today will be interesting statistics on the UK labor market. Considering how disastrous the data on the British economy last week was, one should not expect any positive. Nevertheless, we continue to believe that Brexit is the main driver of the pound, and statistics in the current reality can lead only to local movements. Accordingly, weak data, of course, will provoke sales but are unlikely to lead to the formation of a trend. This means that purchases in intraday oversold areas remain relevant to us. Let's get back to the events of yesterday. Perhaps the most significant was the opening of the oil market with a gap up. The reason is concerns about the supply on the market. The fact is that Iraq and Libya drastically reduced oil production. In Iraq, because of protests, in Libya, because of armed groups that blocked the pipeline. And although it is very likely that these force majeure are temporary, we recall our recommendation to buy oil, which continues to be relevant in the current conditions. We also continue to be supporters of the impending crisis, or at least the strongest correction in the US stock market. So it was nice to note the replenishment in our ranks. The head of the IMF, Kristalina Georgieva, in her last interview, compared the current situation to what was happening in the world on the eve of the Great Depression. A key common feature of the 1920s and the present situation is excessive financial squandering. According to the head of the IMF, depression cannot be avoided. The whole question is only in time. In this regard, we recall our recommendations on buying safe haven assets (gold in the first place and Japanese yen in the second), as well as the “trading idea of the decade” - in the sale of shares of high-tech companies in the US stock market.
Short
by Trade24Fx
The week results: many events but few changesThe previous week was rich in important events, some of which can be formally classified as “game changers”, but judging by the dynamics of prices in the financial markets, the game did not undergo any special changes. Let's start with the most global. The United States and China signed documents on the first part of the trade deal. But there was no euphoria - almost immediately it became clear that this was really only the first step towards solving the problem. Hundreds of billions of dollars in tariffs remain in force, and harm to the global economy will continue to be done. China's GDP growth rate in the fourth quarter of 2019 was minimal over the past 30 years, which is the best illustration of the previous phrase. Other macroeconomic statistics released last week clearly confirmed this. The UK was the most disastrous data: GDP, industrial production, retail sales - all in the red and much worse than forecasts. Statistics from the US and the Eurozone also did not shine: industrial production in the States and the Eurozone came out in the negative zone. In general, against the backdrop of such statistics, we were once again surprised at new historical highs in the US stock market and became even stronger in our belief in its imminent decline. Madness cannot last forever. We already wrote about Putin’s initiatives and Medvedev’s resignation in Russia. We only note that the sale of the Russian ruble after the sale of shares in the US stock market and gold purchases, in our opinion, is one of the most promising positions in the financial markets as a whole. Speaking of gold. After the gold sellers could not get anything out of the signing of the agreement between the USA and China, we became even more fond of buying this asset both within the day and in the medium term, especially after gold returned above 1550. The Japanese yen, although it looks weakened, also It is a good alternative to gold, but in the foreign exchange market. Speaking about the upcoming week, we note that it promises to be even more interesting. It can be called the "Central Banks Week". The Bank of Japan, Bank of Canada and the ECB will announce their decisions on monetary policy parameters in their countries. And although experts do not expect global changes, given the weak form of the global economy, one can count on fairly “pigeon” sentiments in the ranks of the Central Banks.
Short
by Trade24Fx
Top Perfoming Save Haven CommodityAll comments and likes are very appreciated. _________________________________________________________________________________________________________________ The price of gold could hit a record high of $2,000 an ounce within the next two years as US economic growth fades and the Federal Reserve cuts interest rates, according to analysts at Citigroup. We can track a big bullish cycle in gold. Since the beginning of the year we can observe that XAUUSD possibly entered into a final wave V of 5 waves bullish cycle. The New York-based bank said in a Monday research note that the precious metal could top levels last seen eight years ago, when gold surged to $1,900 an ounce, as uncertainty over the 2020 presidential election combines with a sputtering domestic economy. Investors around the world have been drawn to gold at a time of negative bond yields, which have increased the appeal of yieldless assets such as gold. Around $15.3tn of bonds are trading at levels that guarantee buyers a loss, if the bonds are held to maturity. The gold price has risen by 2.5 per cent since 1st of January to trade at $1,558 a troy ounce, Citi said a combination of lower rates, growing risks of a global downturn, and strong demand among central banks could push prices higher still. Big foreign-exchange holders such as China, which has $3.1tn in reserves, have been keen to diversify their portfolios to limit exposure to the US dollar. China’s central bank has bought $4.8bn worth of gold over the past year 2019. _________________________________________________________________________________________________________________ All comments and likes are very appreciated. Best Regards, I0_USD_of_Warren_Buffet
FOREXCOM:XAUUSDLong
by I0_USD_of_Warren_Buffett
1
US stock market: growth out of control The Dow Jones Index is showing the longest period of growth in its history. Given that this growth is completely divorced from economic development, even the most avid bulls in the US stock market are beginning to doubt about prospects: the growth is clearly out of control. There is another fact: when the market grows very rapidly in a very short period, it becomes extremely vulnerable to correction. According to many analysts, a correction in the US stock market is inevitable and its minimum scale is 10% -20%. Jack Ablin, chief investment officer at Cresset Capital, expects a 15% correction in early 2020. The problem of the US stock market in terms of continuing the bull rally is the lack of drivers for such growth: the economic growth rate has long lagged behind the stock market growth rate, on the eve of the Presidential election, there are no serious economic reforms to be expected, companies are stopping their share buyback programs, and their financial results for the fourth quarter in a row show worse growth rates. Perhaps the only chance for stock market growth is an active interest rate cut by the Fed. But the Central Bank made it quite clear that it is not going do that. Recall, we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it is going to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times, the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
NASDAQ:NDAQShort
by Trade24Fx
Christmas Trading, Fed & Aussie BreakthroughThe pound had dropped below 1.30 earlier in the week. AUDUSD gained a foothold above the resistance level of 0.6900. If this breakdown turns out to be stable, then a wide space opens up for the AUDUSD for further growth to at least 0.7020 or even 0.7200. Since AUDUSD is above 0.6900, its purchases seem to us profitable. But in any case, remember the Australian dollar refers to commodity currencies, which means it is extremely sensitive to news from the fields of trade wars. Further de-escalation of the conflict will contribute to the implementation of the scenario described above. But the slightest fears about the negotiations between the USA and China can negate yesterday’s breakdown. In addition to the Australian dollar, what is happening on the foreign exchange market is worth noting except the inability of the pound to go below 1.2920, which can be taken as a signal that a panic wave has subsided. In this case, upon the return of the GBPUSD above 1.30, we recommend its purchases. Today we’ll talk about the monetary policy of the Fed and a rake the Fed stepped on. The Trump invades not only the politics and economy of the United States but also intervenes in the activities of an independent body, the Central Bank. Yes, the direct threats and calls of Trump are ignored by the Fed, but there are indirect points (for example, the consequences of trade wars) that the Central Bank cannot ignore. So the Fed’s attempt to normalize monetary policy and smoothly blow out the price bubbles that have formed in the stock market, corporate lending market and the debt market, faced with the consequences of the trade wars unleashed by Trump. And in 2019, instead of the planned increase in the rate by 0.50% -0.75%, the Fed cuts the rate three times. Thus, provoking further inflation of bubbles. So, the consequences will be more disastrous. The World Bank predicts China the role of the epicentre of a new global crisis. So we may well face a new Asian crisis, but unlike 1998, the matter will not be limited to a slight fright and default of a single Russia.
by Trade24Fx
2
Pressure on pound intensifies & apocalypseDespite the Christmas holidays and general calm in the forex market, the pound is dropping. Going below 1.30 is a very bad sign, but given the importance of the level zone 1.2950-1.3000, there is a serious risk of a full-fledged downward to 1.20. If the markets continue to believe in the impossibility of signing a trade agreement between the EU and the UK until the end of 2020, then exactly 1.20 is the mark to which the pound will be lead. Our position on the pound is unchanged: a critical reason for a “soft” Brexit is available and it will be extremely illogical to cross out the results of the efforts of the last three years at the last moment. So, in the medium-term purchase, buying pounds with each 100-point drop makes it more attractive, as the risk level is decreasing and the profit potential is growing. As for intraday trading, while the pound is below 1.30, bears control the situation. Accordingly, there is no desire to go against the market. Therefore, while the pound is below 1.30, we will trade on the intraday basis in both directions. Note that in the “thin” market, taking important levels is often false, so you should be prepared for a turn at any time. Now most pairs have quite interesting entry points. EURUSD, for example, a purchase from support 1.1070-80 with stops below 1.1040 and profits in the region of 1.1150 seems to be a very balanced trade (30-80 risk points account for 70-80 points of potential profit). USDJPY: all bull attempts to gain above 109.50-60 failed 2 times in a row. And if so, then it seems logical to decline to 108.50 region. That makes it possible to open a profitable position. Sale from 109.50 with stops above 109.80-90 and profits of about 108.50-60. The ratio of profit to risk is almost 3 to 1. Let’s back to the information background. World Bank experts frighten of the scale of the new crisis (debt crisis): the debt burden is growing rapidly, both in the private and public sectors, and this is happening not in individual regions, but around the world at the same time. The undisputed leader is China so that it can become the epicentre of global problems. We have been waiting for a crisis for a long time and every day its probability, in our opinion, is becoming higher. So buying safe-haven assets continues to be one of our favourite trading ideas.
Short
by Trade24Fx
Gold Mining Sector is a No-Brainer. Cheapest it has ever beenGold miners versus the price of gold itself is the cheapest it has ever been. The gold mining sector cannot go to zero and it is the closest to zero it has ever been. How often does one get the opportunity to enter a sector at generational Value investors should love this sector. - fundamentally undervalued. basing at all-time lows - Gold achieved 6-year highs in the dollar this year and all-time highs in all other currencies. - Tremendous amounts of malinvestment and toxic debt. - Central banks openly expressing they will provide all the liquidity the market needs. Increasing acceptance of negative interest rates, including in the US Federal Reserve. No signs in sight of money printing slowing, precisely the opposite.
TVC:XAULong
by Ludwig_Von_Mises
5
Good news from US, dollar & new threatsA lot of macroeconomic statistics was published yesterday, however, it did not lead to significant movements. GDP was revised upwards 2.1% instead of preliminary 1.9%, and durable goods orders exceeded the most optimistic expectations (+ 0.6% m / m instead of -0.9% m / m). Well, the number of people receiving unemployment benefits in the United States so generally reached the lowest level since 1973. However, people were not in a hurry to buy a dollar in the foreign exchange market. Even against the backdrop of news that another progress has been made in the negotiation process between the US and China: Trump said that phase 1 of the trade transaction is close to its completion. The lack of reaction to such a clear fundamental positive, in our opinion, is very symptomatic. Accordingly, we are not going to revise our recommendation to “sell the dollar”. On the contrary, thanks to yesterday's data, sale for the dollar against the euro and the Japanese yen became simply excellent as well as Gold. So yesterday's dollar appreciation is an opportunity, not a threat. We continue to monitor analysts predicting an imminent crisis. We are not even interested in the time frame as much as the reasons. So far, our collection has the collapse of the CLO market, the growth of staff salaries and the fall in corporate profits because of this, huge debts both at the state and corporate levels, the collapse of price bubbles in the stock and bond markets, trade wars, and growing inequality in world, the end of the business cycle. So today in our piggy bank replenishment: a crisis in the banking system of China. According to the Bank of China, more than half of Chinese banks may collapse if the economic situation in the country worsens further. And this is tens of trillions of dollars. For reference: the size of China's banking system is about $ 40 trillion, which is two times bibber than the US banking system. That is the problem. So we find another confirmation of our basic investment strategy: to shorten the US stock market while buying safe-haven assets (gold and Japanese yen). Well, in conclusion, we note that the spring is now compressed to its limit (for example, the volatility of the euro has reached a historic low).
TVC:DXYShort
by Trade24Fx
About the recession, markets immunity to good news & US GDPThe US and China have traditionally been optimistic about the progress in the negotiations, but apparently, the markets no longer respond to this. If you yell “wolf”, in the end, people will no longer come. Something similar we can see in the negotiation process between China and the United States. They have been optimistic for more than a month, but there is no breakthrough. In this regard, we will continue to look for points for the purchase of safe-haven assets, which are providing excellent entry points. We will bring up a topic of the upcoming recession. In yesterday’s review, we wrote about the forecasts of Societe Generale analysts who expect a recession in the spring of next year. Recall, in March 2019 the so-called yield curve inversion took place (an anomalous situation when the yield on short-term US treasury bonds exceeds the yield on long-term bonds). As a rule, after this, a recession occurs within 12-18 months. Despite the fact that now the yield curve has returned to normal. In the spring comes the end of the countdown of 12 months. So analysts at Societe Generale are probably not mistaken. Fed Chairman Jerome Powell, meanwhile, once again confirmed that the US Central Bank is likely to continue to hold a pause in interest rate policy actions. Today, unlike Monday and Tuesday, will be quite busy in terms of macroeconomic statistics. First of all, we are talking about data on US GDP for the third quarter. Given that this is the second reading of the indicator, that is, the revised value, we do not expect any serious surprises. However, analysts do not expect as well, predicting the immutability of the preliminary assessment of 1.9%. In addition, you should pay attention to orders for durable goods in the United States, as well as the ADP report on the level of employment in the private sector. A busy day for the dollar will end with the publication of statistics on personal income and expenses, as well as incomplete transactions for the sale of housing. Recall our position on the dollar - to look for points for sale for almost the entire spectrum of the foreign exchange market. But today we are acting with an eye on the output data. This is not about changing the direction of the trades, but about the possible emergence of more interesting points for its sales.
TVC:DXYShort
by Trade24Fx
US Dollar Has Entered Its Next Multi-Year Bear CycleWe are only 1 or 2 years away from another full-blown global competition for currency devaluation. The next crisis will NOT be like 2008. In 2008 we began the crisis with the US Dollar Index (DXY) at an all-time record low and the crisis caused a flood into the dollar. Where we are now is much more similar to 2000: High dollar, high stock market, quiet commodities market, incoming easy money policies. Additionally, the Fed is acting very preemptively. They will not wait until recession is blatant before they take action (like in 2008), they're already doing QE4, which means if the economy turns lower even more ---> they will launch an official and permanent asset purchasing program in order to keep rates low. We are at the beginning of the end game now: Which is a global race to devalue the currency in order to keep asset prices up and to enable insolvent governments to continue to print and borrow. The global banking system will soon need massive central bank interventions, bigger than anything we've seen before. Look for a new all-time low in the DXY below 70 to be set before the mid-2020s.
TVC:DXYShort
by Ludwig_Von_Mises
9
Powell breaks taboo & opens a Pandora's boxThis week Fed Chairman Jerome Powell was speaking to Congress. He the things that may modify the state of the foreign exchange market. It is not about the Fed rates and the monetary policy vector, but about problems that have been trying not to talk about, because attracting attention to them is a very risky idea. We are talking about the so-called “three Ds” which are major US problems and precisely because of which it can collapse into the abyss. They are Government Debt, Budget Deficit, Trade Balance Deficit. In our reviews, we have already mentioned that more than once. The markets preferred to remain silent about “three Ds” existence since this is a time bomb for the US economy It's only a matter of time before it detonates. The US debt exceeds GDP and reached $ 24 trillion, the budget deficit is about a trillion dollars a year, the negative balance of export surplus on an annualized basis has exceeded $ 0.5 trillion. These figures also tend to deteriorate, since the construction of the pyramid of public debt in such conditions is inevitable and sooner or later it will collapse. Sum up, the dollar and the US economy will be under ruins. Therefore the markets are trying not to think about it. However, this week, Powell upset the stability and attracted the attention of markets to the problems of public debt and budget deficits, noting that without their fundamental decision, the US won't help any Fed action. The current rate leaves very little chance for the action of the Central Bank in the event of a crisis. Powell admitted that this time the Fed is unlikely to be able to pull the United States out of depression, as it was in 2007-2009. Focusing on the “three Ds” is a very bad signal for the dollar. If the markets turn their attention to these problems, the dollar may begin a very protracted decline, the bottom of which is simply not visible from the current height. So, our position to sell the dollar has only received additional argumentation. It is worth noting the positive statistics on German GDP. Positive because the country escaped the recession and was able to demonstrate even minimal, but still GDP growth (0.1% with the forecast of -0.1%). The eurozone as a whole also showed GDP growth (0.2% with the forecast of 0.1%). In this light, the current price of the euro seems quite attractive for us to purchase it. The variation of the hundred points is permissible. Remember set up small stops. The pound ignored weak macroeconomic statistics (retail sales appeared worse than expected in the negative zone). Which once again confirms our recommendation to buy a pound at the earliest opportunity. The only threat to the pound is Brexit. But from this side, problems should not be expected until the election results are announced. So we continue to look for points to buy the pound. China showed weak data. Which again renewed the purchase of safe-haven assets. Nevertheless, buying gold or the Japanese yen you should be careful, since any positive news regarding the negotiations between the US and China may stimulate local sales in safe-haven assets.
TVC:DXYShort
by Trade24Fx
Trump attacks Fed, UBS expects pound to riseUnfortunate week for oil buyers. Following the news about a possible increase in supply and weak demand growth in the future, as well as Morgan Stanley's forecasts about a 25-30% reduction in market prices. Another disappointing news. The agency’s World Energy Outlook (WEO), published that oil demand peaks within the next 10 years. Recall that this week Saudi Aramco gave the oil market 20 years. According to IEA analysts, the current growth in oil demand will last for 5 years maximum, and then we will see a significant slowdown. We are talking about long-term forecasts, so now oil may well ignore these estimates. But in general, the future of the oil market looks rather unsightly. As for yesterday’s oil growth, it was largely due to verbal interventions by the OPEC Secretary-General, who tried to smooth out the effect of the above-mentioned news. In particular, he said that in 2020 growth in oil demand could beat forecasts, oil supply from non-OPEC producers could decline sharply soon. Despite the growth of oil yesterday, taking into account current prices in the market, we continue to recommend selling the asset. Also, despite the strengthening over the last couple of weeks, we recommend selling the dollar. The further fate of the Fed rates is still in limbo, but the further decline will be a strong hit to the dollar. In this light, Trump's next attack on the Fed was quite remarkable. The US President accused the Central Bank and Powell of slowing down the economic development in the States. The Fed, unlike other leading central banks, did not want to divert rates into the negative zone, which harmed the US economy. Such information at a time of the impeachment procedure, Trump gives reasons for the sale of the dollar. Moreover, you can sell it against euro, pound or Japanese yen. Also, the Canadian dollar in the region of 1.33 seems to be a good candidate for buying USDCAD (we are talking about the sales of this pair). The British pound is another excellent candidate for purchases against the dollar. We have already noted that in conditions of an almost complete absence of risks of a “no-deal” exit, the current prices for the pound seem to us underestimated by at least 500-1000 points. According to the updated forecasts from UBS, our estimates are still very conservative. Since bank analysts see the pound paired with the dollar in the region of 1.54 over the next three years. Since we are interested in the time horizon in months, not years, the achievement of 1.40 with GBPUSD will completely satisfy us. Returning to the situation with the dollar, we note that yesterday's data on consumer inflation in the US as turned out to be rather neutral and did not change the existing situation in the foreign exchange market. Today we are waiting for GDP data in the Eurozone and Germany, as well as for retail sales in the UK. Besides, the attention of the markets will be riveted to the speech of Fed Chairman Jerome Powell to the US Congress.
Long
by Trade24Fx
Unrealized potential and plans for the futureJapan, Canada and the USA central banks' decisions, U.S. and Eurozone GDP latest statistics, as well as data on the US labour market 7 days latest news. In principle, each event from this list would be enough to fill the average week. As for the political aspect: a signal about possible problems in trade negotiations between the United States and China, the next parliamentary elections in the UK and ongoing impeachment process against Trump. The absence of significant movements in the foreign exchange market last week surprised us. The change of more than 100 points +/- was observed in most pairs. However, we consider this rather as an opportunity for trading, since unrealized potential has accumulated in prices. Accordingly, we plan to take up its implementation in the current week. Perhaps the greatest potential has accumulated in the US dollar. The Fed rate cut (the third in 2019) was unnoticed by the markets. Statistics on the US, which came out last week, although was better than forecasts (GDP and NFP), still made it clear that the general state of the US economy is deteriorating. The USA non-farm payroll (NFP) for instance. + 128K was 50% higher than analysts' forecasts, who expected growth at 85K. It would seem that the dollar should have just soared based on such data. But on the other hand, + 128K is 20-30% worse than the average value for the last couple of years. Also, the ISM index in the US manufacturing sector in October, published on Friday, was 48.3 points only (a value below 50 indicates a decrease in manufacturing activity). In our opinion, the dollar fell following the results of the week should have been much stronger. And since it did not happen last week, it will happen on this one. Therefore, we will continue to look for opportunities for dollar sales in the foreign exchange market. The Canadian dollar is a nice candidate for that. The Bank of Canada left the rate unchanged, that is, the percentage differential between the US dollars and Canada declined. The main Canadian dollar issue was news that the Chinese do not believe in the possibility of a long-term trade deal with the United States, while Trump stays in power. That is concerns about the ongoing trade war. Accordingly, commodity currencies were under pressure. But the value of the safe-haven assets grew: gold and the Japanese yen. We recommended buying them last week and will continue to do so in the current week. Note that under the current conditions, the formation of a trading portfolio, that is, when buying a Canadian dollar, it is advisable to have yen and gold in the list of positions. On Friday The Russian ruble paired with the dollar strengthened quite well and as a result, even closed below 63.50. Formally, it opens the way to further decline to 62.50 area. Despite this, we continue to recommend the USDRUB purchases. Everything goes according to the plan announced by us earlier: the first time of purchases from 63.60, the second one we start at about 62.60. So if someone has not bought a pair, you can do it now purchase at 63.60, and who is already in position should wait for an attempt to hit the 62.50.
Long
by Trade24Fx
Happy anniversary Bitcoin.From a 1989 article in the The Wall Street Journal, by Victor Niederhoffer, speculator: Speculators don't only create bubbles (not sure short term speculators make bubbles happen, they might actually smooth them). The Federal Reserve was created by a US president to separate the money supply from the government. But they ended up being control freaks very destructive. I'll make another idea more detailed on that, in particular on the Bretton Woods system. Satoshi in his white paper, published 11 years ago, said: And 6 months later he said: "The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust." I do not know a single Fiat currency outside of the British Pound that stood the test of time. And just 4 months after this, Bernanke told US politicians "The Federal Reserve will not monetize the debt". Because it was temporary apparently. Today the FED has pumped the stock market to a point where the rich are so rich and the poor so poor than 1/3 of US citizen get in debt just to eat (corporate buybacks did not help). Europe is not better. Some countries even have negative interest rates and they are looking into "deep negative" rates, like -10% a year. The IMF has a guide on Enabling Deep Negative Rates to Fight Recessions www.imf.org The central banks are debasing currencies. And it's actually hurting the 90%. They keep pushing this pyramid scheme up. The problem is, a peer to peer system can't even fight those low IQ central authorities, because they are just going to ban it. They're going to have to end up in jail. The UK drifted to the right, the US drifted right, but also left, actually very far left it's scary. Those central morons that think they are helping (are they really that stupid? It has to be intentional) won't stop, and won't let people save cash, buy gold. So maybe citizen voting far left or right is necessary. But do those politicians understand they have to get rid of the central banks (or reduce their powers)? All I hear is "white man bad, rich people evil, let's stop progress" it's like none of them has a clue what the real issues are. Bitcoin reached a point where it went into a mania attracting alot of gullible unskilled speculators excited by stories of "Bitcoin millionaires". The tech reached its saturation point, it can't scale further, and there is very low interest in using it as a viable currency. I hope it will remain in history as a great prototype and not just a speculative bubble that cause "innocent people" to lose their shirts. Bitcoin ended up being a ponzi/pyramid scheme, with early adopters making a huge amount of money on the back of late adopters. But anyway, it possibly opened the way. Central banks have done so much harm. Over and over. Just like governments trying to prevent traders from trading or forcing prices. Take the example of oil demand being high on the east coast because it's terribly cold, and demand is very low on the west coast. When the government forces a price, traders have no incentive to buy cheap on the west and sell high on the east (as price is not moving even with supply and demand varying). And so on the west coast they warm their swimming pools they don't use, while on the east there is not enough Oil for everyone and people are cold. I could list so many examples. Over and over same story. Perhaps we could evolve into having currencies that are not completely controlled by some central authority. The gullible victims that are dreaming of lambos would really love to see their favorite ponzi scheme be bought by everyone (greater fools). But I have a better solution: The free market. Let's let currencies not be controlled in such a way, or very minimally, let's let the stock market not be controlled, and let them fluctuate naturally as they should. Ultimately it does not even matter what currency we use, it's just a number to help make things convenient, to help with trade. As long as it has the basic qualities it's all good. Central institutions hear about Bitcoin and immediately they want to control it... Risible... Crypto gambling moonboys don't care of course, but using a crypto will serve no purpose if it is fully controlled by a central bank. What we really need is to get rid of ultra controlling and manipulative central authorities. Central banks power must be reduced. Governments too. Their role should be of regulation, administration, resolving conflicts, governing the military (with limitations)... Not manipulating and spending like degens. Look around, there are great examples of centralized systems, decentralized ones, and mixed. But I think the best ones are a fusion of both. Just some examples off the top of my head... Central powers have to stop sticking their filthy paws everywhere, preventing innovation and causing poverty and generally pain & destruction. Let people with a financial incentive to do good, participate freely in the economy. There is no simple workaround. We have to get rid of all controlling central authorities. No alternative. Just like Ron Swanson said. Satoshi was right. We need to get rid of central institutions.
BITSTAMP:BTCUSDEducation
by MrRenev
36
Results of Central Banks, US GDP and ADPLet’s analyze the key events of yesterday. Consumer confidence in the Eurozone is rather depressed, as indeed the entire economy of the Eurozone. But at the same time, the euro did not show any specific movements. The dollar, on the contrary, despite the relatively good statistics, was losing its way. Preliminary data on US GDP for the third quarter came out much better than analysts' forecasts (+ 1.9% y / y with a forecast + 1.6% y / y), consumer spending also showed growth. Employment data from ADP (especially important in anticipation of tomorrow's data on NFP) also higher than expected (+ 125K with a forecast +110 K). Although we note that fact that USD paired with the Canadian dollar strengthened due to the decision of the Bank of Canada to leave the rate unchanged. Therefore the USDCAD provided an excellent opportunity for its sales, as we recommended in yesterday. It means that you can sell it today. The main event of yesterday, of course, was the announcement of the decision of the Federal Open Market Committee. The rate was cut by 0.25%. As a result, the dollar continued to suffer losses in the foreign exchange market. Our recommendation on the dollar remains unchanged - we are looking for points for its sales. Tomorrow we are waiting for the official statistics on the US labour market, which is likely to lead to the formation of a full downtrend. But we will talk about this tomorrow. The Bank of Japan: the rate is unchanged. The press conference of the Central Bank will take place after the publication of this review, so we’ll talk about its results tomorrow. In the meantime, we tend to buy the yen primarily against the dollar. Today we are waiting for the statistics on GDP growth in the Eurozone, data on personal income and expenditure in the United State to come out. Our recommendations for today: sale USDCAD, as well as the dollar as a whole in the foreign exchange market; buy gold and sale the Russian ruble.
Short
by Trade24Fx
Commodities are Getting Ready to POP!!Gold typically leads commodities by a few months and so given the surges and breakouts in gold, silver, and platinum, I think the CRB index is next. Looking at the chart, its clear this is a chart that has been gradually shifting in trends. In my opinion, most of the heavy selling is over. CRB index has been forming a sexy looking base and looks like it could begin surging. Timing wise, this coincides perfectly with the Fed & central banks globally beginning new easing cycles. Its still early, as the breakout has not started, but its looking ready to get its first real pop sooner rather than later. In my view the CRB index presents tremendous value over the next several years, especially now at these ridiculously suppressed prices.
TVC:TRJEFFCRBLong
by Ludwig_Von_Mises
3