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Sunday, January 6, 2008
6 Jan Daylight has come, so has Recession
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Daylight has come, after 2 weeks of darkness prevail when USD was tossed from its height at 1.4311 into the abyss at 1.4830, a 500 pips drop. The people or vampires who did the pushing has disappeared on Friday, sold Euro to those rushing to long Euros after NFP.
However, a greater monster has appeared: Recession. No media, government officials or Fed for that matter can hide the fact that US is now in recession. (the official recognition of a recession is by the department of economics statistics, which would be 1 year later). In fact a deeper analysis of the employment figures, and methods would reveal that the actual figure may be even lower.
The subprime crisis is still far from over. With more revelation of losses emerging, and counter-party risks materialising, banks and financial institutions have more to disclose in coming months.
The housing oversupply is accelerating when those speculators can not longer afford to hold their multiple houses when credits are hard to come by. Schiller is forecasting the loss of real estate value is going to triple in coming years to $3 Trillion or more.
http://business.timesonline.co.uk/tol/business/economics/article3111659.ece
There is a worthwhile article by Professor Brad Delong: Three cures for three crises
http://www.project-syndicate.org/commentary/delong73
First type of crisis: liquidity crisis caused by declining confidence in the financial system,
cured by Central Bank lending
Second type: falling asset prices, cured by monetary easing (current Fed mode)
Third type: bursting buble, cured by nationalising the financial system or inflaiton.
So far the market is only measuredly pricing in the second type of crisis, not the third.
The media and government would continue to talk up the economy, with a pending Bush annoucement of some form of economic stimulus.
In coming week, we may see Fed officials shifting stance to growth concern, laying grounds for Bush stimulus and accelerated cuts. Possibly the Fed target rate would be at 3.25% before summer ends. That is inline with Ben's academic belief in deliverying the maximum impact and not in a measured pace.
We would have a year of world wide inflation, while governments seek measure to offset the effects.
The markets would start to price in a US recession and an accelerated rate cut schedule by the FED in coming weeks.
And the challenge now lies on the Emerging Asia economies. Would they be able to decouple from the US recession ?
Asian economies are essentially export economies, China, Japan, Korea, India, Malaysia, Singapore, etc. The manufacturing bases are in a large part investment of US and European companies. (investment in terms of technologies, capitals, etc). With the biggest consumer US and Europe consumer markets shrinking back, the US and European companies would cut back on their production. Obviously any growth in the Asian consumers cannot offset the cut.
Moroever the Asian economies have to struggle with high oil, and secondary inflation in food, wages, etc. Incidentally there is a rampage in Malaysia this week for cooking oil out of fear of price hikes. We are going to see more and more of inflation scares running in those economies.
The decoupling of the Asian economies from US is just a myth propagated to keep investment in the region alive.
Contrary to main stream thinking, Asian currencies may take a dive sometime this year, with a strengthening USD. And that would bring on another set of problems. We would cross the bridge when we come to it.
When all economies come to a standstill, then we would have a falling oil, commodities prices and with it a return of inflation to normal.
The recovery of the economies would be long drawn.
What I have written is contrarian. Mainstream thinking is a slowing US in the first half and then a recovery in the second half. How often does mainstream gets it right ?
Daylight has come, after 2 weeks of darkness prevail when USD was tossed from its height at 1.4311 into the abyss at 1.4830, a 500 pips drop. The people or vampires who did the pushing has disappeared on Friday, sold Euro to those rushing to long Euros after NFP.
However, a greater monster has appeared: Recession. No media, government officials or Fed for that matter can hide the fact that US is now in recession. (the official recognition of a recession is by the department of economics statistics, which would be 1 year later). In fact a deeper analysis of the employment figures, and methods would reveal that the actual figure may be even lower.
The subprime crisis is still far from over. With more revelation of losses emerging, and counter-party risks materialising, banks and financial institutions have more to disclose in coming months.
The housing oversupply is accelerating when those speculators can not longer afford to hold their multiple houses when credits are hard to come by. Schiller is forecasting the loss of real estate value is going to triple in coming years to $3 Trillion or more.
http://business.timesonline.co.uk/tol/business/economics/article3111659.ece
There is a worthwhile article by Professor Brad Delong: Three cures for three crises
http://www.project-syndicate.org/commentary/delong73
First type of crisis: liquidity crisis caused by declining confidence in the financial system,
cured by Central Bank lending
Second type: falling asset prices, cured by monetary easing (current Fed mode)
Third type: bursting buble, cured by nationalising the financial system or inflaiton.
So far the market is only measuredly pricing in the second type of crisis, not the third.
The media and government would continue to talk up the economy, with a pending Bush annoucement of some form of economic stimulus.
In coming week, we may see Fed officials shifting stance to growth concern, laying grounds for Bush stimulus and accelerated cuts. Possibly the Fed target rate would be at 3.25% before summer ends. That is inline with Ben's academic belief in deliverying the maximum impact and not in a measured pace.
We would have a year of world wide inflation, while governments seek measure to offset the effects.
The markets would start to price in a US recession and an accelerated rate cut schedule by the FED in coming weeks.
And the challenge now lies on the Emerging Asia economies. Would they be able to decouple from the US recession ?
Asian economies are essentially export economies, China, Japan, Korea, India, Malaysia, Singapore, etc. The manufacturing bases are in a large part investment of US and European companies. (investment in terms of technologies, capitals, etc). With the biggest consumer US and Europe consumer markets shrinking back, the US and European companies would cut back on their production. Obviously any growth in the Asian consumers cannot offset the cut.
Moroever the Asian economies have to struggle with high oil, and secondary inflation in food, wages, etc. Incidentally there is a rampage in Malaysia this week for cooking oil out of fear of price hikes. We are going to see more and more of inflation scares running in those economies.
The decoupling of the Asian economies from US is just a myth propagated to keep investment in the region alive.
Contrary to main stream thinking, Asian currencies may take a dive sometime this year, with a strengthening USD. And that would bring on another set of problems. We would cross the bridge when we come to it.
When all economies come to a standstill, then we would have a falling oil, commodities prices and with it a return of inflation to normal.
The recovery of the economies would be long drawn.
What I have written is contrarian. Mainstream thinking is a slowing US in the first half and then a recovery in the second half. How often does mainstream gets it right ?
Saturday, January 5, 2008
5 Jan CUT CUT CUT 75bp
Bernanke got full marks in 2006 when he resisted pressures and keep hiking to 5.25% and pause. Inflation then was mild, economy was in Goldilock. He was just in the eye of the hurricane.
The last 50bp cut was given to forestall the credit crisis not exactly for the economy. And then in last FOMC he cut only 25bp, b'cos Hank was visiting China, and it is not nice to show your depositor (China buy US treasuries) that you are on a accelerated rate cut schedule.
With election in November and knowing that rate cut has a lag of 6 months to a year to have a impact on economy, Ben has to accelerate the cut to benefit the Republican, instead of letting the harvest goes to the next President.
With the impending FOMC on 30 Jan, the next one on 18 Mar, there leaves no choice, but to cut 50 bp/75bp of on 30 Jan.
However, we may have a call for a inter-meeting rate cut announcement, perhaps on the week starting 13 Jan. Then 50 bp would be appropriate.
The difference between Recession and Slowdown is a matter of confidence of the masses. With such agressive cuts, the public would acknowledge that the gloom and doom.
That brings us to the topic of ECB. Trichet has been most reluctant to cut, as he understands the behviourial economics aspect of rate cut. He wants to keep people in Europe buoyant, feel good and be productive. Overall Europe is still doing fine, just showing signs of slowing down.
While BoE is an opposite. With the recent cut, London is full of gloom and doom. Football is no longer fun. Mervyn mishandled the Northern Rock debacle and has lost the ability to forestall any further rate cut. However London is likely the one to emerge from the slump earlier than Europe or US.
Hence next week 10 Jan is key.
If you want to position your trade and helpful technical analysis to aid in your decision, email me at dollarproaragon@hotmail.com to subscribe. 150 USD/month for 3 months.
Meanwhile, if you like what you read, click on the links to explore some free materials on forex education, trading platform, news, etc.
The last 50bp cut was given to forestall the credit crisis not exactly for the economy. And then in last FOMC he cut only 25bp, b'cos Hank was visiting China, and it is not nice to show your depositor (China buy US treasuries) that you are on a accelerated rate cut schedule.
With election in November and knowing that rate cut has a lag of 6 months to a year to have a impact on economy, Ben has to accelerate the cut to benefit the Republican, instead of letting the harvest goes to the next President.
With the impending FOMC on 30 Jan, the next one on 18 Mar, there leaves no choice, but to cut 50 bp/75bp of on 30 Jan.
However, we may have a call for a inter-meeting rate cut announcement, perhaps on the week starting 13 Jan. Then 50 bp would be appropriate.
The difference between Recession and Slowdown is a matter of confidence of the masses. With such agressive cuts, the public would acknowledge that the gloom and doom.
That brings us to the topic of ECB. Trichet has been most reluctant to cut, as he understands the behviourial economics aspect of rate cut. He wants to keep people in Europe buoyant, feel good and be productive. Overall Europe is still doing fine, just showing signs of slowing down.
While BoE is an opposite. With the recent cut, London is full of gloom and doom. Football is no longer fun. Mervyn mishandled the Northern Rock debacle and has lost the ability to forestall any further rate cut. However London is likely the one to emerge from the slump earlier than Europe or US.
Hence next week 10 Jan is key.
If you want to position your trade and helpful technical analysis to aid in your decision, email me at dollarproaragon@hotmail.com to subscribe. 150 USD/month for 3 months.
Meanwhile, if you like what you read, click on the links to explore some free materials on forex education, trading platform, news, etc.
Thursday, January 3, 2008
4 Jan GOD save the QUEEN
Cate Blanchett in the movie "Elizabeth the Golden Age"
Do you know what GBP stands for ? it says GREAT Britian Pound. When the Pound was GREAT, one GBP is worth one pound of GOLD.
Now GBP is heading into demise, thanx to its countryman.
When it was Elizabeth I rule, Britian rule supreme, and the German, French, Yankess, Sultans, Chinese came and kneel before the QUEEN.
When it was Elizabeth I rule, Britian rule supreme, and the German, French, Yankess, Sultans, Chinese came and kneel before the QUEEN.
With a weakening currency, the natural choice would be for UK to join Eurozone to fight the inflation with a strong Euro. And UK would surrender its century old treasury to the ECB.
Hence, GOD save the QUEEN.
yours sincerely,
(soon to be knighted, Sir DOLLARPRO)
visit the site http://www.elizabeththegoldenage.net/site.html for more information on the movie "Elizabeth the Golden Age".
some commercials first:Meanwhile, feel FREE to explore the links here. You would be surprised at the FREE education, FREE trading platform. That is how we learn, eventully leading to FREE profits. Click on the links if you like what you are reading here.
some commercials first:Meanwhile, feel FREE to explore the links here. You would be surprised at the FREE education, FREE trading platform. That is how we learn, eventully leading to FREE profits. Click on the links if you like what you are reading here.
Update 6am ET
----------------
some new chart for you guys. The famous Madame Butterfly. It is going to be a stops hunting session.
Update 8:20 am ET
--------------------
Euro rallying higher at 1.4730, leak of a worse number ? or a ploy to suck into the longs ?
Update 8:31 am ET
--------------------
18K job 5%
ok, 50bp cut for 30 Jan FOMC. USD is toast.
Recession is oready here. (the media and government is masking it)
Some economist are already out there writing that governments should let inflation run to save the economy. i.e. FED would cut to 3% and lower.
Update 10:40 am ET
---------------------
Euro stall at 1.4830 and retrace. should have flushed out some late long, and now slowly building towards 1.4850/60.
Monday should be another thin day. Then perhaps wait for 10 Jan ECB and BoE.
If you want to know where to take profit or where to position for the next trade, email me dollarproaragon@hotmail.com for subscription with message header "subscribe".
I have been banned from the other forum, b'cos I made the right call (means broker no stops to hunt today). Hence I am spend all my time on my blog.
3 Jan OIL at 100 now. USD to 1.7000 ?
some commercials first:Meanwhile, feel FREE to explore the links here. You would be surprised at the FREE education, FREE trading platform. That is how we learning, eventully leading to FREE profits.
If you like what you have read, click on the google links and show me your support.
for subscription, email me at dollarproaragon@hotmail.com with message header "subscribe".
I have my subscribers complaining, why am I giving out so many free signals. I told them that my subscribers got the signals way before anybody else, hence able to lock in positions much earlier and maximise the gain, or advoid making the wrong trade.
By the time, I post the chart here, the move is almost half way through. and when I post it in other forums, it is already 3/4 way through. And if they follow when the move is about to complete, their stops would be taken in a retracement. Hence the Right Signal at the Right Time is most crucial. There are hundreds on free signals on the internet, but can you trade on them ?
Afterall, I do show Tender Loving Care (TLC) to my subscribers.
Now Oil has touched 100 USD. Now what is the deal ? The OPEC and Russia etc are wary of America stockpiling the strategic oil reserve.
The OPEC hence refuses to increase production, hence Oil would not see any downside soon.
The strategic oil reserve also hold the key to supporting the Equities. Once US announces the release of oil reserve, Oil would drop and Equities would bounce. Probably Gold would drop as well as a retracement.
Now all factors are converging, Oil, USD, Equities, Commodities. As FED has lost its means to control the markets thru interest rates. US has to device another tool.
(FED uses the Interest Rate tool to save the neck of some mortgage and banking hotshots, and the Interest Rate tool has lost its credibility. Even if FED cuts to 3% tomorrow, the markets would just give a knee jerk reaction. Hence for that matter, the US currencies is worth even lesser than what it is now. Perhaps in the region of 1.7 to a Euro based on the measurement of TRUST).
However this is a flaw in this scheme of things. US has just handed the trigger of the gun to the Iranians and the radicals. Now Iran and radicals have a larger influence on world economy. With a Homuz blockade, or blowup of pipeline, hijack of oil rigs, kidnap of oil workers, all these events would now pull the strings of world Equities.
What a shame, US, FOMC has just surrendered the world to the radicals. How sad.
Update 11:35pm ET 2 Jan
---------------------------
In Asia market time, one of the broker keep pumping out news of European market fall, European growth concern, (likely to agitate the Asians into selling Euros)
If you want to subscribe, send email to dollarproaragon@hotmail.com with the message header "subscribe". It shall be 450 USD for 3 months. You can easily earn back the fee on your first trade.
If you like what you have read, click on the google links and show me your support.
for subscription, email me at dollarproaragon@hotmail.com with message header "subscribe".
I have my subscribers complaining, why am I giving out so many free signals. I told them that my subscribers got the signals way before anybody else, hence able to lock in positions much earlier and maximise the gain, or advoid making the wrong trade.
By the time, I post the chart here, the move is almost half way through. and when I post it in other forums, it is already 3/4 way through. And if they follow when the move is about to complete, their stops would be taken in a retracement. Hence the Right Signal at the Right Time is most crucial. There are hundreds on free signals on the internet, but can you trade on them ?
Afterall, I do show Tender Loving Care (TLC) to my subscribers.
Now Oil has touched 100 USD. Now what is the deal ? The OPEC and Russia etc are wary of America stockpiling the strategic oil reserve.
The OPEC hence refuses to increase production, hence Oil would not see any downside soon.
The strategic oil reserve also hold the key to supporting the Equities. Once US announces the release of oil reserve, Oil would drop and Equities would bounce. Probably Gold would drop as well as a retracement.
Now all factors are converging, Oil, USD, Equities, Commodities. As FED has lost its means to control the markets thru interest rates. US has to device another tool.
(FED uses the Interest Rate tool to save the neck of some mortgage and banking hotshots, and the Interest Rate tool has lost its credibility. Even if FED cuts to 3% tomorrow, the markets would just give a knee jerk reaction. Hence for that matter, the US currencies is worth even lesser than what it is now. Perhaps in the region of 1.7 to a Euro based on the measurement of TRUST).
However this is a flaw in this scheme of things. US has just handed the trigger of the gun to the Iranians and the radicals. Now Iran and radicals have a larger influence on world economy. With a Homuz blockade, or blowup of pipeline, hijack of oil rigs, kidnap of oil workers, all these events would now pull the strings of world Equities.
What a shame, US, FOMC has just surrendered the world to the radicals. How sad.
Update 11:35pm ET 2 Jan
---------------------------
In Asia market time, one of the broker keep pumping out news of European market fall, European growth concern, (likely to agitate the Asians into selling Euros)
If you want to subscribe, send email to dollarproaragon@hotmail.com with the message header "subscribe". It shall be 450 USD for 3 months. You can easily earn back the fee on your first trade.
Wednesday, January 2, 2008
2 Jan Recession Recession Recession Recession....
picture taken at 2 am ET. Those who want it earlier, pls subscribe. email "subscribe" to dollarproaragon@hotmail.com
I changed the title to "RECESSION" from the former "LOST". as I heard 4 hosts on the national TV spoke the "R" word almost total 10 times within a span of 3 minutes.
I think by the time government and media admits that they are in recession is when the government exits.
some commercials first:
Meanwhile, feel FREE to explore the links here. You would be surprised at the FREE education, FREE trading platform. That is how we learning, eventully leading to FREE profits.
EURO did not break 1.4750 as most were eagerly awaiting 1.4850. Anyway, I saw 1.4750 as the ceiling, however it broke through my base and fell harder than I thought to 1.4570.
Some good buying of Euros happened through Asia and Europe time.
Did you see the BUTTERFLY in the picture below. This picture was taken at about 2am ET.
Market sees a weaker ISM manufacturing at 50.4 vs previous 50.8.
The risk is that cheaper Dollar has been spuring the produciton. However media since Asia open has been lambasting a weaker dollar, b'cos of a possible slowdown in manufacturing.
Hence which is which ? possibly you would need Elliot Wave to ascertain if the rise from 1.4311 has been completed.
However, the surest trade is the Short GBP. GBP is awfully weak, in the absense of any Santa Claus. If GBP weakens further against EUR, UK may be forced to join Eurozone to counter the possible high inflation due to a weakening currency and economic slump. The inevitable union of UK and Europe may come in 2008, under the leadership of Gordon, the guy who sold UK Gold at 250 USD/oz. (now Gold is at 840, just a few yrs later).
One important theme the media is chanting is the EMERGING ECONOMIES, and of course the ASIAN CURRENCIES. Incidentally, Singapore has an unexpected lower GDP figure today.
Update 10:25 am
------------------
as my subscribers already know, I am looking for higher Euro today, and 1.4860 in target. The pullback on Monday 31 Dec, was just to replenish stock for the Euro bulls.
Want to know what is the next move ?
Update 11:35 am
-----------------
expect Euro to stall below 1.4750, and then climb over it after FOMC minutes, these are stale news. If it shows some pple toking about 50bp cut, it would add fuel to Euro rally up.
going for my lunch, no more update. Good luck....... wish you all had made lot of pips.
Tuesday, January 1, 2008
1 Jan Happy Volatlile new year
Volatility is the word, for all instruments, Forex, Equities, characteristics of a terminating run in all markets.
Jesus never disappeared, HE is everywhere, every time. Just like our Euro Bulls there are just around the corner.
Subscription fee is now 150 USD/mth for 3 months. Once I cleared all those 2007 subscription backlog, the 2008 rate would kick in.
Meanwhile, feel FREE to explore the links here. You would be surprised at the FREE education, FREE trading platform. That is how we learning, eventully leading to FREE profits.
I have added a link to the old charts at I use. Want current day charts, you got to subscribe.
Good luck and HAPPY NEW YEAR.
Jesus never disappeared, HE is everywhere, every time. Just like our Euro Bulls there are just around the corner.
Subscription fee is now 150 USD/mth for 3 months. Once I cleared all those 2007 subscription backlog, the 2008 rate would kick in.
Meanwhile, feel FREE to explore the links here. You would be surprised at the FREE education, FREE trading platform. That is how we learning, eventully leading to FREE profits.
I have added a link to the old charts at I use. Want current day charts, you got to subscribe.
Good luck and HAPPY NEW YEAR.
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