If you’ve heard me say it once – I’ve said it a million times. A strong U.S Dollar will not be tolerated, as it represents a “red-hot poker to the eye” of both the corporate American “and” The U.S Fed.
You can fire up with all the fancy economic bullshit you can rustle from the countless “pro risk/pro USD/pro economic recovery loser blogs” out there ( and I hope you do ) and it won’t make a stitch of difference.
This thing will be cut off at the knees as U.S earnings plummet to the depth of an ocean.
Lets just call it the “Sea of Recession”.
You’ve heard of it but have no f*^*king clue where it is…..perhaps try looking in your backyard.
Short USD trades are once again “up and running” as we prepare to snap up all those long trades – soon going overboard.
I’d take a look at U.S Equities as well and consider that when BOTH the U.S Dollar AND Stocks start dropping like a rock….the big boys will have already taken the life rafts to shore.
I’ll already be on my private island – scanning my beaches for washed up traders and radio shack suits.
Do you think New Yorker’s can even swim?
I doubt it.
Finally! Something of significance!
If you take a look at two pairs such as GBP/JPY as well GBP/USD as a “control” – you’ll see that over the past few days of general GBP strength “both pairs” have been moving higher essentially ruling out any real movement in either JPY or USD.
Zooming in closer and taking a look at each of these pairs on much smaller time frames ( take the 15 minute for example ) you’ll blatantly see the “post Fed minutes” move has GBP/USD pushing higher and GBP/JPY falling off a small cliff.
THIS IS WHAT WE WANT TO SEE! ( Yoda may not ).
Suggestion that both USD as well JPY are finally moving “regardless of the currency they are pitted against”.
Obviously the same thing can be seen just taking a look at USD/JPY as a pair unto itself but….in this case ( looking wider at many pairs ) we see clear suggestion that USD and JPY are moving ( in opposite directions) to a much larger degree.
The Nikkei has also taken quite a “fast dip” here post Fed minutes so it’s pretty fair to say that markets aren’t particularly pleased with “something”.
Any bets on where The SP 500 and The Canadian TSX are likely headed next?
The weather here this time of year is absolutely beautiful, with the sun shining and the cool breeze blowing in off the Caribbean sea.
A retired German couple has moved in across the way, with the Mrs. out tending to her flower pots by day, and the gentleman blessing us with the sweet sounds of his accordion / squeeze box music by night. Happy days indeed for those not concerned with the daily comings and goings of the U.S stock market.
A bounce here to around the 2040 Level in SP 500 should give the few remaining bulls ( or at least those that still have a couple bucks left ) a chance to hit the exits before the next leg lower wipes out the lows at 1970 – then heads substantially lower.
Finally marking the near term highs in USD, Gold will hold up ( perhaps a few dollars lower ) before making its next leg higher as safety is “oh so quietly” sought.
The Japanese Yen has long since made its medium term low, and has been consistently gaining strength for weeks now, as commodity currencies continue to get absolutely smashed. AUD/JPY ( remember my most profitable trade idea moving into 2015 ?) as well NZD/JPY and CAD/JPY now down over 1000 pips from their highs.
The sideways action in equities is almost complete, and it should only be a couple more days until we see reversal “again” – this time being the last before the established “downtrend in risk” continues thru February / March.
I’m not trading much these days and as boring as it may appear, sticking with the same medium term plan of “short USD” and “long JPY” ( via everything “other than USD/JPY in itself ) continues to make the most sense.
“Buy and hold” for anyone with “bullish intent” will soon prove to be a misstep.
I’m starting off the new year with a bang, banking just over 900 pips total in short trades via AUD/JPY, NZD/JPY as well CAD/JPY.
These pairs have fallen fast ‘n furious with the recent move towards “risk aversion” and there is never a better time to take money off the table than “when there is money on the table”!.
We’ve discussed the correlation of a stronger Yen and weaker Commodity currencies here time and time again – so these pairs ( being a no brainer ) provide the biggest bang for yer buck in “straight up” pitting the weakest against the strongest.
I will be planning to re enter these pairs in coming days, as they “may” take a reasonable bounce before continuing on their way down.
252K “new jobs” added “this month” ( primarily bus boys, servers and part-time workers ) with 294K new additions to the unemployment lines “this week”.
I marvel at the math…and the American vision that “things are improving”.
252k new jobs added this month…..with aprox 1.2 million “new additions” to the unemployment roll. Please…..help me understand how this can possibly be seen as anything other than “horrific”.
Seriously….someone with some “shred of sanity” I implore you….explain this to us.
252k “new” jobs paying close to ( if not under ) minimum wage, while 1.2 million people jump on the “unemployment benefits wagon” this month alone.
Now that’s what I call economic growth.
That’s what I call “recovery”.
Let’s see how things look near days end as USD and the “currency world in general” just isn’t buying it.
Holding steady….and waiting for the “swing high” in USD.
Readers / visitors from Singapore have now overtaken the total number of visitors to Forex Kong from all North American countries combined.
A recent study has found that the number of households with investable assets of US$1 million (S$1.26 million) or more rose 14 per cent to 188,000 last year. That means 17.1 per cent of households – or one in six – are millionaires ( this data may be a full year old ).
That’s like sitting down for dinner at your local McDonald’s and knowing that there is “at least one millionaire” sitting at the 4 or 5 tables surrounding you – although I don’t imagine many of them are “actually sitting at McDonald’s”.
Some other interesting facts about Singapore:
- Singapore is the fourth-largest foreign currency trading center in the world, according to the Bank for International Settlements.
- Singapore is the fourth-strongest financial market in the world. The World Economic Forum praised the country for its high degree of financial stability, bank efficiency, and commercial access to capital.
- Singapore could overtake Switzerland as the world’s largest offshore wealth hub by 2020, according to WealthInsight, a London-based research firm.
- There are more than 500 players in the asset management industry in Singapore, with total assets under management of more than S$1.4 trillion.
Obviously something must be going right for these “astute investors” and I’m very pleased to see their numbers growing.
Perhaps a couple of them may have managed to “push through the my sarcasm and disdain” – and taken precaution to protect their profits / exit the markets some months ago – I dunno but……I’ll be hard pressed to hear of any “American Bulls” that have survived January thus far. Impossible.
I expect a “slight bounce” here, providing a last chance opportunity to re-evaluate your current holdings before the real fun begins. As per charts/banter going back some weeks. Global risk has clearly topped.
I’ve seen plenty of waterfalls in my days ( those of Costa Rica the finest ) but have visions of “this one” topping all.
A shout out to Singapore and good luck to all!
With the fundamentals “out the window” now going on some 6-9 months ( if not the entire year of 2014 ) traders and analysts alike have simply stuck with the familiar adage “you can’t fight The Fed ” and just buy the dip.
No question that “if” you’ve been able to endure the massive swings (Sept – Oct for example – essentially wiping the entire “yearly Dow gains” in a matter of 12 days ) or even the smaller one just recently ( drilling The Dow 1000 points in a matter of 6 days ) you should be very, very , very proud of yourself.
Oddly….you never really hear much from “perma bulls” during these times, and one really has to wonder…if it was just that easy to “buy and hold” – then shouldn’t virtually “everyone” be stinking filthy rich right around now??
Funny……you don’t really hear much of that kinda talk either, and by way of U.S unemployment figures ( another miss at 298,000 last week ) you have to appreciate the “mixed message” most people are getting. Is this thing going up? Or is this thing going down?
It’s really the “art of survival” these days. Bull or bear….if you’ve got some extra money in your pocket at the end of the year hey…..job well done.
2015 will undoubtedly bring with it an “even more challenging trade environment” as global geo-political tensions are clearly on the rise, Central Banks are “still” struggling to put floors underneath spiraling economies, and global growth forecasts have been cut, then cut…….then cut again.
I wish all of you the very best in the new year, and as always – encourage you to stay vigilant. The rug gets pulled very quickly, and if I’ve learned anything over these past few years….I’d rather be the guy standing over in the corner………. with a cold beer in hand when it does.
Happy New Year all!
With readership here at Kong now doubling “again” over the past few months – I struggle to understand what “new information” people are looking for.
You do understand that the recent fall in oil prices ( well …actually not so recent considering it’s been falling like a rock since June – down from 110 to now 58 bucks a barrel ) is a blatant and obvious indication that “global growth” and “global demand for oil” is falling off a cliff right?
Seriously…….if you don’t see the connection between “supply and demand” in something this blatant and simple well…….one has to wonder “what you do see” – if anything relevant at all.
Finally something “other than The Fed / mainstream media bullshit” to get you off the couch and start asking yourself?
Could it actually be? You mean all this Kong talk of “global slowdown” over the past months ( despite the ridiculous rise in equity pricing ) is actually for real?
Give your head a shake. The world outside your tiny bubble of plastic wrap and pizza boxes is selling off like hotcakes and you still think Apple looks like a buy here at 110.
Oil related currencies such as The Canadian Dollar as well The Mexican Peso are getting creamed even as The U.S Dollar is falling hard, and The Japanese Yen enters “lift off stage”.
Debate over the next couple weeks and “what ever miniscule points are left” in the general propping up of both Japanese and American markets is a dead mule.
Step back and imagine oil at 30 bucks…perhaps that will get your attention.
Nikkei down another 150 here as of this “early morning writing ” ( it’s 5:30 here this morning ) and no big moves up in SP futures.
It still “feels” a little early but thus far reaction to the move from The PBOC has been sustained. Markets are not looking very “green” to say the least, but we all know what generally happens every morning before the U.S open.
USD/JPY usually ramps – but thus far………trading flat as are EUR/USD as well GBP/USD.
One “has to wonder” what “breaking news” from one CB or another will manage to make its way into the headlines any minute.
I can only suggest to get “under or over” currency pairs by a minimum of 50 pips, getting a couple orders into the system and just letting momentum pick you up.
Today could just as easily be a tiny “doji type candle” or very small / flat as Thursdays generally bring about the larger move.
USD has now met “all criteria needed” to satisfy the beginning of its intermediate decline, but that’s not to say things still can’t move sideways another day or two.
The sustained move lower in oil has obviously got the energy markets spooked, Yen has now put in a solid “swing low” as USD looks to have topped out. Gold and Silver consolidating the big “up moves” from yesterday so……everything “appears” to be on track.
Expect this afternoons “US Federal Budget Balance” number to again miss / disappoint as government spending continues to “grossly surpass” government revenue by oh….I dunno….120 “billion” per month?
Sounds very healthy.
The big news over the past 48 hours has obviously been OPEC’s surprise decision “not” to cut oil production.
In a world of increasingly “lower demand” for oil ( further confirmation of a truly “global slowdown” ) The Saudi’s have opted to sustain production of 30 million barrels per day, keeping market share and putting a real squeeze on The American shale / fracking business, that generally needs to see oil at 75-80 barrel just to remain profitable.
The net effect is generally perceived as “net negative” for oil exporting countries, and could also be a potential catalyst for weakness in U.S equities, with indices carrying “significant weighting” of oil / energy related companies.
The Saudi’s can produce oil much , much cheaper than other nations so in keeping production output high ( and in turn driving prices lower ) there may be more to this than first meets the eye.
A strategic move to drive other oil exporters ( in particular The U.S with it’s high costs of production ) out of the market? 65 dollar bbl oil puts the majority of U.S oil exporters on the back foot and potentially “out of business” should these price levels remain, not to mention driving home the point that “indeed” global demand for oil is certainly on the decline.
I believe it was a 35-40% decrease in the price of oil that also proceeded equities downturns in both 2008 as well 2011.
We are almost exactly at the same point with oil prices as of this morning, so it remains to be seen “what reaction” we may see here in the West as markets digest the information.
First the currency war and now perhaps a “commodity war”? Needless to say….never a dull moment here these days – with “yet another shocker” rippling through markets here this week.
Let’s see what The Central Banks do next right? As this has absolutely nothing to do with you or I.