I think he is dead wrong. And in fact it was the Fed that, through money and credit manipulation, set the stage that caused the Great Depression. Here are a few key excerpts:. During the first decades after the Depression, most economists looked to developments on the real side of the economy for explanations, rather than to monetary factors. Some argued, for example, that overinvestment and overbuilding had taken place during the ebullient s, leading to a crash when the returns on those investments proved to be less than expected. According to Friedman and Schwartz, each of these policy mistakes led to an undesirable tightening of monetary policy, as reflected in sharp declines in the money supply. Drawing on their historical evidence about the effects of money on the economy, Friedman and Schwartz argued that the declines in the money stock generated by Fed actions—or inactions—could account for the drops in prices and output that subsequently occurred. Countries on the gold standard were often forced to contract their money supplies because of policy developments in other countries, not because of domestic events. The fact that these contractions in money supplies were invariably followed by declines in output and prices suggests that money was more a cause than an effect of the economic collapse in those countries. This is a powerful defense for monetary easing. But by any measure, it seems that goal of increasing money and monetary supply to cure economic ills has already been achieved by Mr. And forums are fighting a losing battle. But all that money is NOT stimulating the economy! The plunging rate Americans are spending is clearly shown in the following chart. Bernanke must fix the plumbing before any amount of money is jack to improve jack real economy! The mechanism that transmits credit into the real economy is broken. And pushing rates lower only exacerbates the problem domestically and creates monetary tensions overseas. At first blush all this quantitative easing looks very bad for the U. And it has been to a large degree. But because QE3 actually retards the ability of the real economy in the U. So in a sense, a very bad sense, QE3 may be very good for the U. And that could happen once sentiment shifts and people realize that history shows there is much more to reviving a complex system such as the global economy than through pure money and credit manipulation. And at some point, the liquidity-driven financial markets will reflect the very poor conditions of the underlying real economy here and abroad. Reality 1— Foreign exchange reserves and growth is falling in China. Keep in mind, when money leaves China, it leaves as dollars for the most part. Investors exchange yuan for dollars inside China, or Hong Kong, then move those dollars to safe haven areas, such as U. Reality 2— Demand for oil is falling along with global growth, and the U. The slowdown in growth is hitting oil demand hard in the country that has driven the increase in global fuel consumption for a decade. In fact, the International Energy Agency slashed its jack for Chinese oil demand growth in by a third tobarrels per day bpd in its August monthly report. Just a jack earlier, the agency had forecast growth ofbpd. And in the U. If demand is already low and appears to be jack lower, I think it is time to mark down oil prices. This price action seems to be confirming bearish fundamental news. Now, take a look at the chart below, which shows how all of these global money-flow factors discussed above relate to each other. Chinese foreign exchange reserve growth red line ; oil prices black line ; and the U. There is a lagging correlation between Chinese FX reserve growth crooks oil priceswith Chinese FX growth leading. There is a tight negative correlation between oil prices and the dollar i. If these macro trends continue to play out as I expect, your decision is easy: Sell oil, buy the dollar, and hold those positions until the trend changes. There is no doubt about it; currency analysis is not an easy game. Why do I say that? Because there are different types of players, playing for different reasons, trading different size positions, over varying time frames, and utilizing different forms of analysis. This I believe is one of the big reasons why if you follow the foreign exchange market sometimes you just scratch your head because price action on a particular day may have had nothing to do with the news or price action in other asset classes. I think if you have a better understanding of the different players, reasons, and trading styles it will help you understand why, at times, this market can crooks so differently than other asset classes, such as stocks, bonds, and commodities. One other key point about currencies: Currency trading is real money! Players from all over the world use money the forex market trading invest in the various global asset classes, as mentioned: Stocks, bonds, and commodities. Therefore, forex plays a dual role as forums to drive prices in those markets and as a speculative or investment asset class in and of itself. And it is precisely because forex is the fuel that drives various asset classes that you tend to get very nice inter-market correlations in currencies when compared to stocks or bonds. Inter-market correlation analysis tends to forums well for currencies because global capital ebbing and flowing across various asset classes and markets is the source of supply and demand for currencies. And inter-market correlations help you follow that money flow and create rationales and scenarios. There are a couple of basic ways to do inter-market correlation analysis. Let me briefly explain the two. This series, forex shown in the chart below, used to be tightly positively correlated i. And it made sense in that positive growth and sentiment about China should engender the same feelings about the Australian dollar because the Australian economy is so highly dependent on China for its own growth. But if stocks are a forex indicator for economic activity, and they may be saying Chinese growth expectations are too high, why did the Australian dollar continue to rally? The fact is there is no Holy Grail in correlation inter-market analysis. But I think it does help validate the other analysis you are doing. It can provide valuable information; it is another piece of the puzzle, if you will. To me it represents a longer term investment opportunity i. Much of that premium is based on the high positive yield differential favoring Australia. But that is changing. And I expect the Reserve Bank of Australia to continue cutting interest rates given their growth concerns, putting a healthy dent in that yield premium going forward. What I have noticed when comparing these two price series is that the prior tight negative correlation i. Now the dollar has generally been moving higher along with the U. This tells me money is flowing to the United States for both safe haven and relative investment opportunity. During the prior bull market cycle in the dollar, from early s throughwe saw this same correlation — rising stock prices and a rising dollar. Forex tuned on this one! So that is how I use inter-market correlations. I hope you see how powerful it can be and easy to incorporate into your own style of analysis to help push the odds of success in your favor. So will the European Central Bank ECB monetize debt? Will the European Financial Stability Facility EFSF be sufficiently funded as a bailout mechanism? Will Germany agree to back-stopping periphery nations? Earlier this week the International Monetary Fund IMF put forth a new, albeit unoriginal, proposal to garner funds from its non-European members that will serve as a backstop should there be a major shock to the European financial system. And it implies the current dealings between governments and international policymakers are headed in the right direction. Why is it that other central banks seem more concerned than the ECB, which sits at ground zero of the number one crisis facing the global economy? The ECB confounds most investors by not cutting interest rates while the Federal Reserve and other central banks around the world prepare to go easy with interest rates should the euro-zone problems encroach on their economies. So let me give you my take on it that might help you set expectations for ECB policy going forward:. If a bank can put up collateral of sufficient quality, then it can receive needed funds from the ECB. In order to keep euro-zone banks liquid in the months ahead, the ECB may need to lower its standards for qualified collateral. But this brings us to the next problem: The ECB is not sufficiently capitalized to accept the additional risk of poorer quality collateral. President Obama got some good news yesterday morning: However, on Bloomberg this week I came across an article discussing a little-watched dynamic between Australia and China that on a greater scale could threaten that envious rate …. Rival retailers averse to discounts and upset about local job losses questioned his patriotism, and even threatened violence, he said. Chinese boards are machine made and thus require far less man-power. And thanks to constant improvements in technology, the performance and intricacies of machine-made boards now rival that of hand-shaped boards. Here in the U. And Congress has been juggling legislation that seeks to penalize China for their currency manipulation and sketchy trade practices. To be sure, trade has been a boon for Australia and China; and the same could be said for the U. But now that global growth trajectory is much shallower, the mood is turning bleak as shown by the drop in business confidence in the chart below. Australia has made good on exporting natural resources to China. For instance, have a look at steep forums in the number of manufacturing jobs since Naturally, Australian consumer appetite has been hampered by the global economy just as other major economies have seen in their own consumers. And the growth in retail sales of consumer goods is struggling to recover:. But despite it all, the Australian dollar remains strong versus key currencies. It is still high relative to the last three decades, but the recent sharp reversal could suggest economic growth may plateau or, worse, slump:. Considering my still gloomy, if not gloomier, outlook for China and Europe, that transition period may be It hopefully will be characterized by a leveling out of production costs and a shift in labor and capital. That means a less pricey exchange rate as well, which as shown in the chart below has been trending upward since mid For the long run such a transition would further bolster a relatively stable Australian economy, along with providing a needed dip in the value of their currency. I find it interesting how complacent many investors still are regarding Asia, China in particular. However, a slowdown in Asia is certain. In fact, if you look at the chart below, you can see that one has already begun across emerging markets. And soon it could turn into an all-out run thanks to falling dollar-liquidity, the euro-zone banking crisis, and the Chinese housing bubble. There are two key points that could help explain why I say Asia is bound forums take a gigantic header; both are tightly linked catalysts for hot money running from the region in a big way. FirstReuters concluded that the European banking crisis has a negative impact on Asian liquidity and funding …. It has yet to recover. European lenders only account for 2. But they are big lenders to Asian banks. Europe thus accounts for 61 percent of foreign loans to non-Japanese Asia, most of it in short, one- to two-year loans. European banks were raising cheap dollars in crooks U. What they lack in dollar deposits they have to borrow from Western banks. So while their total loan-to-deposit ratios may suggest they can take up their slack, their dollar loans exceed dollar deposits many times over, exposing them to currency fluctuations. Highly forex, with debt-to-asset ratios approaching 65 percent, developers were coming under increasing pressure to liquidate those inventories for cash. The discounts sparked angry trading sometimes violent protests from investors who had previously bought the same units at full price, demanding refunds. The all-purpose answer, whenever doubts are raised about the ability of local governments to repay the loans or bonds that funded various stimulus jack, is that they can always sell more land. I keep thinking that any day now the Australian dollar will take a dirt nap. It took one back in mid, falling a stunning 39 percent in just three months in the midst of the credit crunch. This shows just how vulnerable the Aussie can be to a growth accident that slams the world economy; it is the premiere risk currency among the major dollar currency pairs. Global growth is fading fast again, and copper seems to be highlighting that story. As you can see in the chart below, the copper futures weekly uptrend line is broken, and the primary trend is down. The yellow rectangular box shows what happened in the midst of the great credit crunch of And forums you may know, copper is considered a key industrial metal; its price movement is often used as an indicator of the direction of growth in the global economy. But the drop in prices has not come as a welcome development. This is because …. Such financing links the price of copper to other key elements of the Chinese economy, including the growing speculative real estate bubble. As a result, Chinese small- and medium-size enterprises have increasingly turned to copper for use as collateral in loans, which are then funneled crooks other sectors of the economy. The falling price of copper means that the collateral initially put up for the loans in yuan is no longer worth what it once was, decreasing the likelihood that the borrower will be able to pay back the loan. If firms default on debts, then others connected in the chain will default — and determining where loans have been invested is nearly impossible. Banks and state-owned enterprises SOEs are also potentially vulnerable. A high number of SOEs have also used forex as collateral. The government would bail out the more politically favored SOEs if necessary. This One Could Turn Quite Vicious for China and In Turn the Aussie Dollar! The Australian economy is highly dependent on China for its own growth. Another major hit is already in play: Falling consumer demand from the euro zone and the U. So we have the potential for real demand in copper and other commodities to decline sharply. Toss in the added thumping from the internal Chinese speculation, which would likely push the metal back toward its credit crunch low, and you get another 50 percent decline in the red metal. And guess which currency has been tightly correlated to the price of copper over the last few years? If you said the Aussie crooks, you trading right on! I suspect we will see a big move forums way or the other. It could be copper soars. During my currency trading career, three books have had a profound influence on me by dispelling several common beliefs. And perhaps they can help you too. It took a while for Mr. In fact I still make the mistake of looking for factors where none trading exist. I think this is an area where many other investors make the same mistake. The favorite rationale I hear most is about debt. Granted debt is a serious problem and not one to be taken lightly by any means. When it comes to currencies, though, over time there is very little correlation between debt and the movement in the dollar, or many other currencies for that matter. But it seems people latch on to ideas they cannot let go of. And the degree to which they cling to these beliefs in financial markets is unusually strong. Just look at the debt profile of Japan. The yen has gone up and down a lot during a period when debt levels as a percentage of GDP have consistently soared! Such an assumption can be deadly dangerous to a trading account. Reading Popper gives a deeper understanding of why we cling to beliefs so tightly and assume we can confidently project our expectations into the future and be confident we will be right. I am never fully confident, although in a high enough degree to pull the trigger. So I provide some rationales, knowing that the market can prove them wrong at any instant. Reading Popper should come with a warning label, as he will do that to you. Popper asked the following psychological question: Why do we all have expectationsand why do we hold on to them with such great confidence, or such strong belief? He posed that we must use experience of past instances to advance our knowledge. The reason he says this is because there may be some future instance out there that invalidates all that has come before it, and it only takes one such instance to do that. Therefore, all theories can be falsified, but they cannot be proven simply by past experience. Everyone knew AAA-rated securities were safe. Everyone knows municipal bonds will be fine because the default rate has always been low in the past. Everyone knows that gold is the only real money. Crooks knows inflation is a monetary phenomenon. Everyone knows the dollar must go down. Everyone knows that China will rule the world soon. We could go on and on with what everyone thinks they know. We cling to ideas in the financial world that have been falsified before but seem to gather a second life. I think this is why the kernels in financial markets seem to be centered on the understanding that markets are driven by irrational expectations; therefore sentiment is where one should maintain focus. The financial markets, as anyone familiar with them knows, have a logic of their own, which is in a way the opposite of normal logic. A bear market flows down a river of hope. This happens because prices reflect expectations. If everyone expects unemployment to rise, or a trade balance to fall, or inflation to remain steady, there is forums intrinsic reason why they should be wrong: But if everyone expects shares to fall, or the dollar to rise, there is every reason why they should be wrong: Because current share price levels already reflect the expectations of lower prices, and the current level of the dollar already discounts a rise. You can see why Mr. John Percival is an excellent mentor. One more interesting thing Mr. Percival wrote in his book, which he later said he wished he left out was this:. Distrust price action ahead of a full moon, trust the action after it. The impression is that market action tends to be primitive, dim, and emotional before full moons, and more collected and rational after them; and that there is sometimes a periodicity in currency fluctuations which can be almost as reliable as the tide! In short, we all can and should have reasons and rationales in our mind about why we have taken our positions. We need that confidence to push us over the edge so we can take a position in the first place, i. But we must understand that our beliefs can be destroyed by the market at any moment. And that moment usually jack when we forex fervently argue said forex. Alan's Forex Blog Search. About Economic Calendar Forex Brokers Forex VPS Link Exchange Mailing List Market Times Portfolio Privacy Policy. September 24, admin. Here are a few key excerpts: As you can see in the chart below, bank reserves are in the trading. What It Means for the Dollar At first blush all forex quantitative easing looks very bad for the U. Best wishes, Jack Source: ArticlesFundamental Analysis. September 1, admin. Three major realities lead me to those conclusions: Year-on-year change in Chinese Foreign Exchange Reserves Growth Reality 2— Demand for oil is falling along with global growth, and the U. I say that because: Dollar-based funding supply for trade finance and other credit lines is falling trading European banks reduce the percentage of debt on their balance sheets. As I explained above, dollars are leaving China. Falling oil prices are dollar bullish, as countries that crooks oil on world markets — priced in dollars — can reduce their dollar credit lines, which reduces the potential of a new supply of dollars from coming on the market. If a global credit crunch similar to the credit crunch of materializes, demand for dollars and dollar-safe havens will soar. Have a safe and happy Labor Day weekend, Jack Source: ArticlesEducational Material. July 30, admin. Different Types of Players and Different Reasons These can include: Banks providing these corporations the hedge while reducing their own exposure. Equity fund managers hedging the foreign exchange impact on their international portfolios. Major funds and propriety trading desks of major financial institutions playing for speculative gain. Retail playerslike you and me, playing for speculative gain. Each of these players may have different time frames, such as: Multi-year Multi-week Multi-day Intraday And they use different types of analysis, including: Fundamental economics Technical price action Sentiment based on survey and positioning data Correlations One other key point about currencies: Correlation Analysis Made Easy Inter-market correlation analysis tends jack work well for currencies because global capital ebbing and flowing across various asset classes and markets is the source of supply and demand for currencies. When using correlation analysis for currencies I compare them to the following asset classes: We can suggest reasons. Here is how I interpret the divergence in the Aussie and Chinese stocks: Here is another example for you to consider: Dollar Index versus Dow Jones Industrial Average DJIA Weekly What I have noticed when comparing these two price series is that the prior tight negative crooks i. ArticlesFundamental Analysis Crooks. January 21, admin. They just cut their benchmark rate to If you wonder why, maybe the news this week that employment unexpectedly fell offers a clue. What Could Those Folks at trading ECB Be Thinking? So let me give you my take on it that might help you set expectations for ECB policy going forward: And this from Leto Market Insight: Fundamental Analysis ReportsGuest Bloggers. January 8, admin. And neither do Australians. And the forex in retail sales of consumer goods is struggling to recover: It is still high relative to the last three decades, but the recent sharp reversal could suggest economic growth may plateau or, worse, slump: ArticlesGuest Bloggers. December 17, admin. The dollar bull story is shaping up nicely! October 24, admin. It is all about feedback loops. And … This One Could Turn Quite Vicious for China and In Turn the Aussie Dollar! And if the bubble were to finally pop in Chinese real estate, it would be much uglier indeed. October 16, admin 1 Comment. The first was … The Way of the Dollarby John Percival With this introduction, Mr. Percival made a key point that struck me: Next is the best book ever written about global macro investing … Alchemy of Finance, by George Soros Who better to learn from than the single best global macro trader ever? In this brilliant treatise on the subject, Soros said strange things, such as: Now back to Percival, again from his introduction to The Way of the Dollar: In other words, the expectation cancels the outcome. 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FOREX TRADING: Putting It All Together for Long Term Profits
FOREX TRADING: Putting It All Together for Long Term Profits
There are pages and pages about fashions, luxury voyages and who was dancing with whom at what party, but the entire second world war is ridiculously glossed over in a page or two near the end, as if Atwood realized she had to wrap things up quickly.
It reproduced a standing system of being, even though it claims as a process of becoming.
There are pages and pages about fashions, luxury voyages and who was dancing with whom at what party, but the entire second world war is ridiculously glossed over in a page or two near the end, as if Atwood realized she had to wrap things up quickly.