intermarket analysis

The Future Economy Explained – Video

Forex Kong 16 Comments

The following video ( and series of videos should you wish to view all of them ) provides some of the most straight forward and easy to understand explanation of The Federal Reserve, the history of fiat money and Central Banking ,as well ideas of what the future may hold – with respect to the outcome of this current financial “experiment”.

These are some extremely well-respected gentleman talking ( many have beards ) including one of our favorites Dr. Paul Roberts, and the material is extremely easy to understand.

I recommend that “anyone” who still may have questions about some of the basics, or still may be struggling to wrap their heads around some of this  – Watch these videos.

I wanted to include them in the material available here at Forex Kong as the information is provided in such a straight forward manner.Perhaps plan to bookmark and come back throughout the week as each video is about an hour-long.

[youtube=http://youtu.be/nB8GmcRV_yg]

Be Thankful You Trade – Merry Ho Ho Ho!

Forex Kong 32 Comments

It’s funny – how completely “obvious” so much of this appears when you’re looking in the rear view mirror. In retrospect you can pull up any number of charts, asset classes etc….then “layer in” the seasonal aspects (with Christmas now in full swing) add a sprinkle of “news” and a dash of some “good data” and there you have it.

Uncanny.Complete and total bliss.Right on cue.

Literally. Right down to the second on a lazy Friday morning, days before Santa comes to town – the news is good, the data is good, the stock market is higher – and you’re feeling pretty damn good about everything.

And so you should.

Considering the amount of poverty and hardship in the world today ( considering the things “I see” everyday ) we should all be so lucky, as to have what we have…..however temporary.

  • We’ve got the Nikkei double top at 16,000.
  • We’ve got “gold double bottom” at 1179.00/1199.00
  • We’ve got U.S equities at all time highs.
  • We’ve got the last remaining days of 2013.

We’ve got USD rolling over and “back in the red”. Huh? – Kong…..again do you know something we don’t?

As if it was almost choreographed to the second, a number of these correlations and levels appear absolutely “blatant” – when looking backwards. Why didn’t I wait for the retest in gold? Now I see Nikkei double top area as resistance…..Damn I forgot about seasonality….etc…etc…

In any case…..it always looks easy when we’re looking in the rear view mirror.

I wish all of you the very best this Christmas season, and encourage you to take advantage of every single minute with family and friends.

Despite the up’s n downs of financial markets we can’t lose sight of the fact that – “it’s a game…..that we the fortunate – have the privilege of playing”.

Be thankful.

 

 

Trade Questions Answered – Where To Now?

Forex Kong 27 Comments

I guess it makes sense to quickly pull this apart, break it down and get squared on where I’m heading next, as the Fed’s tapering announcement yesterday has certainly raised some questions.

It’s obviously still a bit early to be making any “rash decisions” (as a single day of market movement is that and only that) but it is interesting to take a quick look at how a number of asset classes have “initially reacted” to the news.

Gold has been crushed, moving lower a full 30 bucks.

  • But wouldn’t “tapering” be viewed as “less stimulus for markets”? Shouldn’t gold have shot for the moon on the news?

U.S stocks shoot higher, as Dow gains 300 points.

  • But isn’t the idea of “tapering” going to lead to higher interest rates? Shouldn’t stocks be falling as the Fed pulls back on its POMO and market liquidity injections?

The U.S Dollar has moved higher, but is still well under strong areas of resistance. The U.S Dollar has stalled already.

  • But shouldn’t the U.S Dollar “break out” on news of “tapering”? Isn’t the idea of “tapering” supposed to be good for the currency?

Bonds as seen via TLT haven’t even budged. U.S Bonds are still very much under pressure as selling continues.

The media spin is clear – that the U.S is indeed “rebounding” and that the recovery is well under way. This now “confirmed” via the Fed’s decision to taper. The Fed was doing the right thing while adding stimulus, and now will be perceived as doing the right thing in pulling back right?

The puppet show continues, as for the most part “none” of the above “initial reactions” made any immediate sense. It’s unfortunate having things pushed back a day or two but as it stands……everything is “still” very much on track.

I’m expecting to see the U.S Dollar roll over here quickly – (early next week) and will continue with the same framework I’ve been working within these past several months. The Nikkei hit my 16,000 mark for a second last night as well so…..that too will provide some valuable information moving forward.

Sitting out yesterday in near 100% cash was one of the single best trade decisions I’ve made in the past few months, now allowing me to deploy “big guns” at an instance – when “real opportunity” presents itself.

You where warned. You may have gambled. You likely lost.

 

Trade The Risk Event – Sitting On Hands

Forex Kong 26 Comments

As much as I hate reminding you, the Fed meeting runs through today – with announcements expected tomorrow so…….you know what means.

Risk event ahead – as the statement will be released Wednesday at 2 p.m.

Obviously these Fed announcements are what the market’s hinges on these days, as the possibility always exists ( as the Fed has proven in the past ) that they “might” say or do something shocking. Tomorrow’s announcements may provide clearer language on “tapering” – but I doubt it. I’m going to assume they move forward with the continued stance that “tapering will remain data driven”.

The debate is pointless, but what is important is how you choose to position yourself prior too, and then of course “after” the news is out.

From a technical perspective “risk” could easily make one more “little jump higher”, as equities still look “alive” all be it exhausted, the U.S Dollar still appears to be trapped in its downward spiral.

I would look to “sell” any possible “uptick” USD takes tomorrow ( if any at all ) PENDING they don’t announce a tapering, as this should just keep USD steadily on its way to the basement.

“If” by some wild stroke of insanity – they “do announce tapering”, it will require more than just a couple of hours tomorrow, to get an idea of what markets will do with that, and I would suggest to anyone looking to trade it……..let things settle out / calm down BIG TIME before even thinking about entering.

I’m back from a short ( but wonderful ) holiday and ready to go here again. I’ve got a few tiny irons still in the fire, but am for the most part – sitting in cash. As much as one would love to “get in there” and take advantage of “whatever pans out tomorrow” the responsible thing to do is to wait.

Wait I shall.

I Tweet Most Trades – Are You Following?

Forex Kong 33 Comments

I can’t keep posting my yearly gains at the website as I’m pretty sure by this time….it’s getting a little hard to believe.

This tweet from yesterday:

The combined “pips earned” across the board as of this morning (where I booked profits and reloaded 100% the exact same trades immediately) is now encroaching on 750 – 800 pips.

Not a bad day’s work to say the least…but again – after many, many , many hours planning as well placing smaller orders over time. It would be difficult to imagine someone executing a similar trade plan while keeping a fulltime job – away from markets and their trade desk.

The Australian Dollar being responsible for the largest part of it but “coupled” with continued EUR strength.

When you are fortunate enough to choose a given currency pair where movements in “both” currencies contribute to the move (as opposed to just one strength / weakness in one) wow! You can really see some serious action. This takes considerable fundamentals knowledge, not to mention timing, but when you get it right…….you can really “get it right”.

I do my best to Tweet as much of the “larger moves” as I can, but considering the number of trades and the “frequency of trades” when things are moving – it’s near impossible to catch every last wiggle. If you don’t get the tweets then most often conversation picks up IN THE COMMENTS SECTION AT THE BLOG.

I hope some of you have also managed to catch a “pip er two”.

U.S Budget Talks – I Can't Listen Anymore

Forex Kong 46 Comments

I’m done.

I can’t do this anymore…….It’s over.

I’m finished……We’re through….Good-bye……No more… “Se acabo”.

Let today mark the last day I will comment on the subject, short of the possibility of small intermittent outburst throughout the coming years – as the need arises.

Have I completely lost my mind in quickly interpreting todays ” budget deal ” as being a complete and total waste of paper / time / energy ?

All I can make of it is that the “debt ceiling will be increased forever” and they’re just going to kick the can for an additional 10 years! Averting shutdown in Jan / Fed MUST mean debt ceiling raised no? ( And we can see that “markets” likely view this the same as Kong no? )

( There is no such thing as “the debt ceiling” by the way….but that’s another story)

Forgive me please but…….can an American citizen please explain to me how they can suggest that “a significant change to the pensions of federal government workers and the military will save $12 billion over 10 years, $6 billion each from civilians and the military, and much more over time”.

When 85 BILLION “PER MONTH” IS BEING PRINTED OUT OF THIN AIR!

Get this:

There was just a little over $800 billion of base money in existence before the crisis in 2008… that’s 200 years worth of currency creation equaling 0.8 trillion

Now the Fed creates ONE TRILLION EVERY YEAR…meaning they are creating more than 200 years worth of currency……………… every single year!

Perceived “savings” stretched over “ridiculous periods of time” while 1 TRILLION DOLLARS ARE BEING PRINTED EVERY YEAR!

That’s it…..seriously….last post on it ( maybe not ) but……..common really?

Fantastic profits today in combination with trades initiated late last week…USD “continues” ( now 8 days in a row since posting ) to lose ground, Commods bounce and now reverse, EUR and GBP strength abound…and …..(wait for it…….wait for it……) JPY making the turn???

Habanero chasers for my fine tequilla tonight peeps….apparently …..I better practice up.

No Taper – Never – More QE To Come

Forex Kong 61 Comments

There is no possible way that the Fed is going to taper, and I find it to be completely irresponsible that the current “media blitz” in the U.S media is speaking of it  – as if it’s practically a given!

This is absolutely outrageous!

A bunch of floating heads reading a teleprompter, speaking as if they’ve some “authority” on the subject, rambling on and on and on,as to how the Fed’s “taper” is not “tightening”.

And you’re buying this bullshit?! Do you even understand the difference? Is there a difference?

It’s like this…..I can find a million different angles to illustrate the point, but in sticking with the “Japan is doomed theme” lets simply consider this.If the U.S Federal Reserve was to actually “taper” we all know the inverse / correlating effect it will have on interest rates. THERE IS NO WAY THE FED TAPERS WITHOUT INTEREST RATES RISING. PERIOD.

Interest rates rising in the U.S will put immediate ( and I mean “immmmmmediate” ) pressure on interest rates around the globe.

Boom!….Japan’s interest rate on outstanding debt rises to only 2% and BAM!

Full scale economic collapse / disaster / as the interest owed would exceed 80% of the government revenue, setting of a string of “economic events” tumbling domino after domino in this now “very global economy” we live in.

There is not a single chance in hell! The Fed is going to risk “global economic meltdown” by way of tapering, and “forcing rates higher” at a time when the entire planet is hanging by a thread.

Impossible.

This thing is so interconnected now that as we’ve discussed in the past – The U.S Fed has painted itself so far into the corner, that the only way to keep the dream alive will be to “increase QE”.

I honestly don’t know how the entire staff of CNBC as well CNN go home every night to their families etc – and are able to look themselves in the mirror with any shred of dignity, moral code or sense of decency.

It’s disgusting.

Japan's Aging Population – Adult Diaper Sales Surge

Forex Kong 12 Comments

Not like Fukushima isn’t a large enough problem for Japan ( and the rest of the world for that matter ) but unfortunately……..it’s only a “near term concern”.

Originally triggered by a “massive baby boom” post World War II, the demographics of Japan have evolved into something pretty unusual. The combination of long life expectancy and extremely low birth rate (one of  the lowest of all developed nations ) has resulted in a rapidly aging population, such that currently “one in every four citizens” is over the age of 65.

According to Japan’s National Institute of Population and Social Security Research, it will be “one in three people” in Japan to be aged above 65 by the year 2030.

There will be more people “over the age of 60” than “under the age of 14” by 2020, with more diapers being sold for adults than for babies.

Japan’s rapidly aging population and low investment returns are driving a decline in savings and wealth ( as retirees now “spend” their savings as opposed to grow them ) dramatically reducing the amount of capital available to fuel the economy.

Since 1981 Japan has produced enough savings to finance its domestic investment needs “and” still export savings as well. But as Japan grows older and it’s savings pool shrinks they will surely become a “net borrower” – meaning…..yet another “purchaser of U.S Debt” will likely stop buying and put even “more pressure” on the economic situation in the U.S.

“You ain’t investing in no U.S Treasury Bonds when your primary concern is maintaining a reasonable quality of life in your later years.”

Is it any wonder we see Japan taking such drastic steps ( via currency debasement / QE etc..) to promote growth and bolster their economy?

A work force that is generally “drying up” ……………and taking their life savings along with them.

Eyes On Japan – Start Following Nikkei

Forex Kong 21 Comments

It’s 11:07 a.m in Tokyo Japan right now, and traders are just getting settled in for the long week ahead.

Considering our “global market” as well the fact that Japan’s current QE program is 3X larger that of the United States – it goes without saying that I’m very interested in activity overseas. A quick look at Asian markets on Sunday night is a virtual “look into the future”, as equally skilled and experienced traders/investors evaluate the weekend’s data and start making their moves.

A current chart of the Nikkei ( I use futures /NKD ), compared to a chart of the SP 500 has both poking around at near term highs so….in that sense ( if you don’t choose to follow the Nikkei specifically ) you can imagine traders in Japan in nearly the “exact same position” as those on Wall Street.

Two separate governments, both with similar monetary policies, printing like mad with hopes they will “somehow” survive. Massive trading floors, big banks flooded with liquidity and a stock market “turned up to 11”.

In the simplest “minute to minute” sense I could easily bet you 1000 pesos that as the Nikkei trades lower, you can look forward to a lower open in the U.S. Half the planet is already “up and running” devouring the news of the day ( perhaps U.S retail sales over the holiday weekend?? ) so…..what? Did you have some idea that U.S markets lead?

With a current QE program “dwarfing” that of the U.S I can assure you – in the current environment of “free money” and “print to eternity” Japan is the country to keep your eye on.

All those freshly printed Yen had to have gone somewhere right?

You don’t think the Japanese are smart enough to “jump onboard” the “bubble fest” currently playing out in U.S equities as well?

Please…….with a full 12 hour head start, I’ll see “trouble on the horizon” in Japan long before you’ve hit the snooze button.

 

China Drops Bombshell On U.S – Quietly

Forex Kong 15 Comments

China just dropped an absolute bombshell, entirely ignored by the mainstream media in the United States. The central bank of China has decided that it is “no longer in China’s favor to accumulate foreign-exchange reserves”. So in other words – China sees little need to continue “hoarding” USD as they have in the past ( in order to keep their own currency suppressed ) and is likely to stop purchasing U.S Debt as well.

As well China also announced last week ( again – completely ignored in mainstream media ) that they will soon look to price crude oil in Yuan on the Shanghai Futures Exchange, bypassing the need for exchange in USD.

The implications and ramifications are massive.

  • China is now the number one importer of oil in the world, and will soon openly challenge use of the petrodollar.
  • Dropping the purchases of U.S denominated debt leaves only the The Fed (as no one else in there right mind is buying U.S Treasuries ) so we can likely expect further downside in bond prices…and of course the dreaded inverse – rise in interest rates.
  • When China starts dumping dollars and U.S denominated debt, it’s pretty safe to say the rest of the world will too.
  • Allowing the Yuan to in turn “appreciate in value” will make all those wonderfully cheap products sold in The United States much more expensive.

In all….this is likely the largest , most significant story / issue now facing the U.S as China’s “backstop” to the U.S Dollar and never-ending purchases of U.S Debt “until now” have been primary drivers in supporting “whatever it is you call this” economic recovery.

Pulling the rug on U.S Dollar and debt purchases is without a doubt the move that “takes the queen”.

Checkmate next.