Get started

QE

RidetheMacro| EURUSD Market Commentery 2020.09.23 🎈 Given the absence of important fundamental statistics today, the pressure on the euro was also limited in the first half of the day. After an unsuccessful attempt to break below the monthly lows, the pair returned back to the opening level. 🔑 From a technical point of view, nothing has changed. Bears will continue to focus on breaking through and fixing below the low of 1.1635. If the pair easily reaches the level, it may drop to new support levels of 1.1600-1.1550 and 1.1535. If the price returns to 1.1770, the buyers will become more active. However, if the quote goes above 1.1770, it may jump to 1.1820.⚠ 🌡 Thus economists upwardly revised the situation in the German economy. It is expected that further growth will be no less active than in the summer period. as the GDP drop in the second quarter was less than expected. 📍 However, the worsening epidemiological situation will shape the control measures and social distancing that could be imposed later. Moreover, if the EU and the UK fail to sign an agreement 🔴, a new trade war may break out. 📍 As far as the labor market is concerned, the number of unemployed people in Germany in 2020 is expected to rise to 2.7 million compared to 2.3 million last year. In 2021, the indicator could fall to 2.6 million. 📌 German consumers currently show two directions. There is the direction of a high willingness to spend, while at the same time the willingness to save is still much higher than prior to the crisis. since the end of 2019, the savings ratio of German households has more than doubled, to 20% in the second quarter. according to ECB study, the increase in the savings ratio in the entire eurozone is mainly driven by so-called forced, ie involuntary, savings. While this would imply that there is lots of pent-up demand once the economic situation stabilizes, the fact that wages dropped significantly in the second quarter suggests that the role of precautionary savings could be more important than suggested by the ECB study. In Germany, nominal wages dropped by 4% YoY in the second quarter on the back of short-term work schemes and the lockdown measures. EURUSD Another Ridethemacro
by Ridethemacro
The myth of hyperinflation series- #2. Fed's toolsEvolution of Fed's QE- Treasury/municipal bonds-> corporate bond ETF-> individual corporate bond-> Yield curve control (in potential development)-> Maybe... Individual stocks in the future... As Fed adds more debts to its balance sheet, it hampers its ability to effectively intervene the market in the future. It will need progressively more and more stimulus packages to get us out of the subsequent financial crisis. Forward guidance- Odyssean forward guidance: Fed publicly commits the FOMC (Federal Open Market Committee) to a future action. Delphic forward guidance: Fed merely forecasts macroeconomic performance and likely monetary policy actions. Try to imagine the following highly improbable scenario- If Fed announces tomorrow that it will raise interest rate to 10 percent and slashes all the govt bonds on its balance sheet, how will the market react? Even something much less extreme of an announcement will and can drive the public sentiment and change the public perception of the market instantly even before the action is actually carried out. Now, that is the power of forward guidance. Yield curve control (YCC)- Basically, Fed has strong control over the short-term interest rate, but much less so on the long-term interest rate. In order to influence the long-term yield, Fed would shift purchase toward longer maturities and target some longer-term rate and pledge to buy enough long-term bonds to keep the rate from rising above its target. Fed employs the strategy of selling short-term treasuries and uses the funds to buy longer-term bonds in order to stimulate and spur borrowing, investment and economy if brings short-term rates to zero isn't enough. Next, we will look at how effective these tools really are by examining few of Fed's past market interventions.
Editors' picks
TVC:DXYEducation
by Libratus
25
How A Market Melt Up - Malaysian Penny StocksSo, the benchmark Malaysian Penny Stocks Index (FBMACE) just went into melt up mode. The indices were almost near its all time low on March and now has broken all time high and more than tripled in a matter of 5 months. What is going on? Simple. The Malaysian Market is SMALL in the grand scheme of things. There is nothing Fundamentally strong about Malaysian economy, in fact we are in recession. A simple analogy, when you have a tank of water trying to fit into a cup, that's what happened. The Central Banks globally has just sent a tidal wave of unprecedented level. Therefore all of this money is going to go somewhere. I doubt Malaysians or even Malaysian Funds have enough fund to pump this market. This market is certainly driven by foreign fund managers looking for cheap equities globally. Well, Malaysian equities are no longer cheap and we are about to enter expensive or bubble mode. I don't expect good things to happen after this, the ultimate corrections and crash will happen and many newbies and retailers are going to be left holding the bags. On all the pump and dump that is going. Reasons why I never tell anyone to enter the market now and shrug off any people who contacted me to ask about the market. I know it will be the top of bubble when people who never talked to me for years suddenly call me up and talk to me. Market always move in cycle. Anyone who try to BET AGAINST central banks are idiots. You either hold cash, hard assests or you remain invested. Another reasons why most rich people in the world are not short sellers. I expect this run up will continue for some time, then, we will peak. In the meantime, there will be many stocks that wll do 10-20x or even 50x. And then that's the end of it. Don't reach out to me. You don't need to and I don't have time to. Sorry. Regards.
FTSEMYX:FBMACE
by UnknownUnicorn735418
The 10 Year QE Bubble - "To Infinity, and Beyond!"A simple look at more recent boom and bust periods of the S&P500 Thinking Out Loud Is the QE Bubble bursting before our eyes? Will we see an all time high before a huge collapse and more Stimulus/QE? Opinion Outlook seems bearish for the long-term. These market levels are not sustainable, and inorganic, we are in the last phase of the QE bubble before it goes pop. COVID19 Wave 2 seems guaranteed at this point... Economic recovery is not going to be a V... Positioning I'm continuing to add on more shorts at these levels and above, long-term, mostly through inverse ETFs. I will continue trading the market pops and drops, while adding on to my long-term shorts. *Fundamentals seem forgotten, but at the end of the day, they ALWAYS rule the markets... this Market is in Mania.
SShort
by jb_skis
2
USDOLLAR's EMAs Reverse on Daily timeFurther to our previous article , FXCM's USD index, USDOLLAR, has reversed its technical makeup. The EMAs are looking to turn negative (green ellipse). If the EMAs develop angle and separation to the downside the green 5-day EMA will be below the orange 13-day EMA, and the orange 13-day EMA will be below the black 34-day EMA. This will be a testament to the Fed's unlimited QE policy, which is looking to devalue the greenback. As long as the USDOLLAR continues to churn sideways the EMAs will continue to whipsaw. We will watch the situation for a trend to develop; this which will make price action clearer.
FX:USDOLLAR
by FXCM
SPY 400 by Labor Day (S&P 4000 this summer)We have not reached the top yet. The S&P will rise due to unprecedented liquidity and serious retail FOMO will kick in for a parabolic rise to SPY 400 (S&P 4000) by labor day 2020. This is the end of a 30+ year secular bull market. Once the fed signals slowing of quantitative easing due to rising S&P and economy showing signs of recovery, the bust will reach its second stage and kick S&P down to 800. Deflation will take control, leading to more QE and trigger inflation long term. Gold $10k by end of decade. Bitcoin will tag along the melt-up and will reach ATH this summer, then crash with the S&P but find a strong support level above $20k and reach $1MM by end of decade.
AMEX:SPYLong
by HashtagTrading
3
DXY bearish biasBeen holding onto this TA for a while now. I posted it on twitter a lot earlier, you can follow me @thecolour_red. On the chart you'll find 3 seller owned levels and one key liquidity area below that holds bullish sentiment. Currently, 100.39 has rejected price and is being challenged by buyers in the aforementioned zone. Fundamentals: -the rejection was printed before the Core Durable Goods figure release and the flow was corroborated on the DOW -additional QE will drive down the bid in the long term Sentiment: -Dollar is overvalued at the moment when compared to G7 currencies Price action: -major squeeze playing out, as you can see from the chop of last week's PA on lower TFs -more patterns printed on lower TFs Technicals: -double top and resistance holding -price currently in range (floor is the bullish area) Additional notes: -BoJ MP statement early in the week (key part of macro analysis and will add bias to global flow)
TVC:DXYShort
by madebyforex
SPX - Update - 61.8% Fib in Sight - Bull or Bear?The SPX has broken above the 50% fib level and looks set to visit the 61.8% retracement. Prior Analysis We have already moved beyond my prior analysis targeting the typical 50% retracement, whilst this is not uncommon it is certainly a testament to the power of stimulus and a positive narrative, or perhaps naivety, as the Federal Reserve has stepped up their "stimulus" to unprecedented levels, north of 1.5 trillion within the past 4 weeks. With Lorrie Logan, head of the federal reserve's open markets, signaling that further irreversible intervention is inevitable: "supporting smooth market functioning does not mean restoring every aspect of market functioning to its level before the coronavirus crisis. Some aspects of liquidity—especially aspects related to transactions costs and market depth—are importantly affected by fundamental factors such as how the current extraordinary uncertainty about the economic outlook influences trading behavior. These aspects of market functioning may not return all the way to pre-crisis levels for some time, even as our purchases slow." With the knowledge that the Federal Reserve is and will continue to be the buyer of last resort, barring direct stock purchases (for now, but that will change shortly). How do we play these markets? The US economy is not going to open until May 1st, at the absolute earliest, according to "leaked" white house documents: "The plan lays out three-phases: Preparing the nation to reopen with a national communication campaign and community readiness assessment until May 1. Then, the effort, through May 15, would involve ramping up manufacturing of testing kits and personal protective equipment and increasing emergency funding. Then staged reopenings would begin, depending on local conditions. The plan does not give specific dates for reopenings but specified "not before May 1." Furthermore the same document states that government intervention is likely to continue until a vaccine is available: "The plan also carries this warning: “Models indicate 30-day shelter in place followed by 180 day lifting of all mitigation results in large rebound curve - some level of mitigation will be needed until vaccines or broad community immunity is achieved for recovering communities.” This fact alone, would suggest that the downside is not over just yet as the longer the lock-down measures remain in place the more the US economy will continue to bleed. But we must not get too bearish too soon. Gap Fills? The correct play at the moment, in my opinion, is to expect more upside albeit only for the short-term, as the rush of stimulus and the apparent slowing of global infections continues to placate markets and with the breadth of CB purchases, the path of least resistance is up. That being said. I will be looking to go short, should the market fail at the 200 ma or at the 61.8% fib level. I will be open to long positions, similar to my WES trade, which produced gains of over 170% in little over a few days, but i am more comfortable, waiting in cash for the time being, as even the slightest bit of bad news can send the markets tumbling lower. -TradingEdge Sources: Federal Reserve Operations: www.zerohedge.com White House Document: www.zerohedge.com BlackRock Following Fed Purchases: www.zerohedge.com
SP:SPX
by Profit_Link
2
QE infinity should send gold and bitcoin soaringThe Fed today announced that it will make "unlimited" bond purchases (QE infinity), as well as buying mortgage-backed securities, corporate bonds, and bond ETFs. It's also opening two new credit facilities for businesses and expanded the existing facilities. Basically it's going to print as much money as it takes, and it's going to do it very quickly. This should stop the big deflation spike we've been seeing, and it should send gold and bitcoin soaring even more than they already have this morning. I bought some UGLD and some short-term calls on GDX and GDXJ. Note the nice bullish engulfing candle on the chart.
FX:XAUUSDLong
by ChristopherCarrollSmith
5
Feeling some bullish vibe on USDCHFI know FED is playing big moves ahead so far to prevent the State from the pandemic before it may cause more disruption around the country. The reason is beyond technical analysis for me to think even slightly how this pair might gonna end up trending upward. The big moves which I'm talking about from fed were the double rate cut within a month and some repo market actions. They aren't taking things slightly any more the moment when they decided to drop their benchmark rate around 0%-0.25% and some big Qe plans coming later. I know most of global central banks honchos are too serious about this pandemic at this moment and Fed has already shown us the real action lately which should slowly help to resolve the issue which had generated by that pandemic "coronavirus" within the state and its economy. Lastly don't forget about Swiss National Bank Intervening to Weaken Franc on recent data from the central banks. They just don't like their currency to get overvalued for various reasons. These conditions let me assume this pair may probably make some new swing highs.
Long
by jessi061
6
AGNC for 480% gains in just 6 weeks!I posted about AGNC at the beginning of January when AGNC was around $17.50, I called for $20 no later than June. What a pleasant surprise that AGNC has continued to stay on fire! Now one might ask how did I turn this little, fairly slow moving stock into 480% gains in just 6 weeks? I mean this sounds like crypto gains, not stock market gains! This is a strategy I like to use where as I find a stock I expect to move but specifically a stock that typically doesn’t move that much. What we find is that the options have almost no overhead premium priced in and are super cheap. Here I bought 50 call contracts for June expiry @ $18 for .28cents each. I am now $1.50 in the money and just continue climbing with a current option price of $1.60! Here is a capture of my specific options and their gains to date. > imgur.com AGNC had another surprise earnings marking two in a row now, an indication that in fact fed policies are benefiting them more than anticipated. AGNC also announced an offering but #1 it was priced at $25 and #2 their offerings aren’t really dilutions, its just an expansion of capital that is tied 1 to 1 with real estate backed securities, more akin to expanding their balance sheets. I took this opportunity to update AGNC because due to the incline, it looks like we will see a $20.50 top of channel and by next month at this rate. This is in contrast to $20 top of channel on this descending channel in June. Also I am selling most of my options now to buy more options further out of the money. While I suspect we will see decent resistance @ $20.50 I believe everything is in place to break resistance this time and start heading back up, maybe $24ish by late 2020. If you have never traded options, you should be extremely careful. Options can expire worthless turning your entire investment to $0 with zero holdings. I prefer option trading to margin trading for leverage trading as I am only risking what I put on the table, I know my total risk up front. Options are not for the faint of heart or new investor. This is not investment advice, DYOR, if its something new to you, always start super small while you test and get a feel for how it works. I will post another update on AGNC as we see the channel resistance start to flesh out. If you trade Crypto as well, please check out our site vcdepth.io with advanced real time and historical level2 data for the broad crypto market. Good luck with your trades!
NASDAQ:AGNCLong
by EncryptShawn
Will S&P catch the Corona Virus to 3075? Or is it S&P to 3550+ My Position: Last TA I published on the S&P we had just announced a phase 1 trade deal had been reached with China. It was great timing as we need a push to get us out of the bottom sub channel we have been stuck in as we were reaching that resistance again for a 3rd time over the last year. I entered the market using slightly out of the money call options for a few months out on SPXL which is a bull S&P 3x return ETF. Before the Corona Virus, I was up 150% in a little over a month. Leading up to now: As many times as its played with breaking up out of the bottom sub-channel, its played with breaking down more. The bottom of channel is also the 10 year bull trend line, we have danced with it several times and late 2018 we had a massive break losing almost 10% value and well below the 10 year bull trendline. We recovered fairly quickly luckily and then we were bolstered with 3 rate cuts and $60Billion in QE-Lite per month still ongoing now. Dangers: Hand in hand with the Coronavirus outbreak, Fed Chief Powell signaled the feds would be looking to curb /end the QE-Lite that is not being called QE. To be fair the feds had reduced their balance sheets and incresed rates through out 2018 after a 3 years of letting things ride after 7 years of constant stimulus to the economy. Here is a great chart that shows a wealth of data in a single chart, from Reuters > USA-FED-PORTFOLIO Most likely this is profit taking after running straight up since mid October 2019 but at the same time investors should be leery of the feds turning off the tap that got this thing fired off to begin with. So as you can imagine given a recent and unquantified virus break out, an ongoing US impeachment that continues to get more complicated, a presidential election later this year, increased trade rhetoric with the European nations and a growing pool of countries resorting to negative interest rates, it is virtually impossible to know where the market will go and when it will correct. I will try to make a few points about the potential price action. ------------------- More probable possibilities: -We are positioned in a good place for S&P @ 3218 or so to hold support and retain grip on the middle channel. The reality is the phase 1 trade deal will act as a stimulus with tons of money flow this year that wasn't there last year, a relief of its own. If this support holds, the next obstacle will be S&P around 3550 around mid-march 2020, value dependent on when we reach top of sub-channel resistance. At this point we should already be starting to see some trade war relief continue the momentum pushing through resistance with slight delay and then seeing top of overall channel for the first time since December 2014. If we continue the general trend we would likely see the S&P at around 3950 by July/August. It would be a major feat to see the price action break up out of this 10/11 year channel. 3950 seems like a good exit for a long position and potentially an entry for a short position. -We could break back down into the bottom channel which if we dive to bottom of that channel has us seeing the S&P500 @ 3075 by early April. With trade rhetoric improving, only the threat of feds dropping their QE-Lite and the CoronaVirus have any ability to knock the market back into the bottom channel. This seems possible but improbable. -We could see the run lose steam as we reach the resistance of the top of middle channel and do similar as we did in 2018. How far we break above the top of the middle channel compared to 2018 as to whether the trend is improving. There is a chance we stay range bound here in the middle channel between 3250 & 3500 (currently) for most of the year, of course rising over time as outlined in the chart. -------------------------- Notes: *If you are a low risk appetite investor, consider putting your money into something more stable with a lower return until after election 2020. The market is volatile and unpredictable. My method of investing in options on 3x bull ETF's is some of the highest risk possible. If you make high risk investments, you should do so with a smaller portion of your overall wealth and pull some percent of profits out towards long holdings. If you trade crypto, please check out our market depth site @ vcdepth.io with various depth of market filters available and recently integrated TradingView charts its great for scalping and swing trading. No one else captures open-interest like we do. This is not investment advice, it is merely observations I have made during my trading analysis and I am sharing. Do your own research
SP:SPXLong
by EncryptShawn
1
US Dollar looking weak. The fed has continued with "QE" Quantitative Easing. They call it "adding to it's balance sheet" It started buying long-term treasury's, debt and mortgage-backed securities to “increase the availability of credit” for home purchases and prop up the economy, according to a Fed statement from 2008. Fast-forward to October 2017: The Fed started gradually selling off those holdings because the economy had since healed from the last recession. The Fed concluded this process Aug. 1. What does QE have to do with the balance sheet? You probably have an idea of the different types of debts you may owe, such as student loans, credit cards or a mortgage. In accounting terms, those are considered liabilities. In contrast, the things you own — stocks, bonds or a house, for example — are considered assets. The U.S. central bank, too, keeps track of its assets and liabilities. It publishes this data in a weekly financial statement known as “the balance sheet.” U.S. paper currency, as well as money that commercial banks hold in accounts at the Fed, are counted as a liability. Assets, on the other hand, are things that the Fed has purchased, such as Treasurys. Now, go back to 2008. When the Fed announced it would start buying massive amounts of bonds, including “subprime” mortgage securities and other forms of distressed debt, it listed them as “assets” on its balance sheet. This caused the balance sheet to balloon. In August 2007, before the financial crisis hit, the Fed’s balance sheet totaled about $870 billion. By January 2015, after those large-scale asset purchases had occurred, its balance sheet swelled to $4.5 trillion. That’s more than a five-fold increase. By the time the Fed finished its normalization process, the balance sheet totaled $3.78 trillion. As a result of all this Satoshi Nakamoto (Craig Wright and Dave Kleiman?) solved the Byzantine Generals problem of double spending and created the White paper for Bitcoin in Oct 31, 2008 (All Hallows Eve) with the hopes of creating a decentralized anti inflationary form of transact able, honest value. This Creation coincided with the bottom on this chart. I can only imagine what the price of that creation(BTC) will do if the chart displayed here bottoms again. Thank you for reading.
TVC:DXYShort
by PigsGetSlaughtered