Market Analysis

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2008-11-14T12:15:00.007-06:00

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Wall Street Bull

2008-11-13T11:23:00.001-06:00

BeforeNow
Via,
Barry Ritholtz
Portfolio.com

Cool New Google Gadget of United States

2008-11-12T17:58:00.004-06:00

Common current inflationary & deflationary views in market

2008-11-12T13:33:00.001-06:00

Bloomberg sues Fed for lack of transpiracy

2008-11-12T10:00:00.000-06:00

S&P500 vs. USDJPY - Daily & 480 mins Time Frame

2008-11-11T20:36:00.007-06:00

We are hearing a lot about November 14th G20 meeting in Washington. Many are saying that it'll be Bretton Woods II. You can check out interesting article on it on Bloomberg. Main focus of this meeting will be stimulating World Financial System & some talk on shifting of power .

Since short term focus is about stimulating the world financial system, I am expecting short term bull on global equity market. Longer term of global stock market will be decided by steps taken in meeting for more regulations.

These are USDJPY & S&P500 comparative charts.S&P 500 daily channel pattern is very simmilar to current USDJPY daily channel pattern.

Therefore, if the pattern is right on bear side than will see USDJPY near 85 and S&P500 in lower 800's.

But if, USDJPY goes back to correction bull side on upper channel line in it's 105 level, then will surely see S&P 500 to 1100 level.

Many Wall Streeters have predicted that we have hit the bottom on S&P500 & many are saying that worst is yet to come, but I am still expecting more strenghning of JPY over the long run, because demand of Japanese Exports has slowed down tremendously .

Now, let's look @ short term charts of these two pairs.Short Term charts are clearly showing bullish chart patterns. And we also know that expansion of credits will rally the market for shorter term. Recently China pumped money into system; interest rates are being lowered in G20 nations rapidly; World Bank is also pumping money. The key thing will be to know what decisions are being taken ub November 14th meeting other than pumping money into system.

Bretton Woods II?

2008-11-11T20:25:00.000-06:00

What a cool chart of US Economy!

2008-10-20T18:51:00.002-05:00

Via Big Picture & Good Blog

"Tri-Polar" Global Currency System

2008-10-20T08:56:00.002-05:00

Bank of Tokyo- Mitsubishi FX Analysis on Bloomberg

2008-10-17T10:31:00.004-05:00

Part 1 Part 2

US Dollar based Technicals- Daily Time Frame

2008-10-17T09:24:00.001-05:00

Sharada Selvanathan - One of my fav. mainstream FX analyst

2008-10-17T09:10:00.001-05:00

CNN's Glenn Beck on New World Currency

2008-10-10T11:00:00.001-05:00

Latest of Jim Rogers

2008-10-10T10:37:00.000-05:00

Vanishing Act by NY Times

2008-10-07T15:52:00.000-05:00

Latest on Amero & North American Union

2008-10-06T15:42:00.002-05:00

Latest of Peter Schiff

2008-10-05T11:10:00.003-05:00

Part 1

Part 2

Paul Van Eden on Fed's Bail out

2008-10-02T13:25:00.004-05:00

Via Business News Network
Previous post of Paul Van Eden's Analysis

Warren Buffet on last night's Charlie Rose

2008-10-02T13:08:00.002-05:00

Via Charlierose.com

Total Borrowings of Depository Instituitions from Fed

2008-09-30T10:55:00.005-05:00

Since 1985
5 Years
1 yearSource: St. Louis Fed

Also look @ previous post on this issue on Aug 29, '08

Fed Fund Target Rate Volatility

2008-09-30T10:40:00.005-05:00

Current Fed Fund Rate: 2.00%

Fed Fund Target Rate 1 year
Fed Fund Target Rate 5 months
Source: St. Louis Fed

S&P/Case Shiller Housing Price Index

2008-09-30T09:21:00.004-05:00

Via Big Picture
Source: S&P Via Big Picture
Source: http://www.tfsbrokers.com/property_derivatives.html

Historic Market Day of September 29, 2008

2008-09-29T20:22:00.002-05:00

Via Bloomberg.....

Bail Out Austrian Economics Way

2008-09-29T18:37:00.002-05:00

Peter Boockvar - Will Bailout Help

Text of Bail Out plan

2008-09-29T14:15:00.002-05:00

Roll Call of each member
Via NY Times....

Once in a Century Rip Off

2008-09-29T10:32:00.000-05:00

A Tally of Federal Rescue..via NY Times

2008-09-28T08:46:00.001-05:00

Source:
http://www.nytimes.com/imagepages/2008/09/28/weekinreview/20080928_MARSH_GRFK.html

Peter Schiff on 700 Billion $ Bail out on Bloomberg

2008-09-26T10:55:00.001-05:00

Sen. Bernie Sanders to Larry Kudlow: You have become a socialist

2008-09-26T08:27:00.001-05:00

Prestigious Group of 192 Economists slammed 700 Billion Bailout plan

2008-09-26T07:56:00.002-05:00

To the Speaker of the House of Representatives and the President pro tempore of the Senate:

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.

Signed (updated at 9/25/2008 8:30AM CT)

Acemoglu Daron (Massachussets Institute of Technology)
Adler Michael (Columbia University)
Admati Anat R. (Stanford University)
Alexis Marcus (Northwestern University)
Alvarez Fernando (University of Chicago)
Andersen Torben (Northwestern University)
Baliga Sandeep (Northwestern University)
Banerjee Abhijit V. (Massachussets Institute of Technology)
Barankay Iwan (University of Pennsylvania)
Barry Brian (University of Chicago)
Bartkus James R. (Xavier University of Louisiana)
Becker Charles M. (Duke University)
Becker Robert A. (Indiana University)
Beim David (Columbia University)
Berk Jonathan (Stanford University)
Bisin Alberto (New York University)
Bittlingmayer George (University of Kansas)
Boldrin Michele (Washington University)
Brooks Taggert J. (University of Wisconsin)
Brynjolfsson Erik (Massachusetts Institute of Technology)
Buera Francisco J. (UCLA)
Camp Mary Elizabeth (Indiana University)
Carmel Jonathan (University of Michigan)
Carroll Christopher (Johns Hopkins University)
Cassar Gavin (University of Pennsylvania)
Chaney Thomas (University of Chicago)
Chari Varadarajan V. (University of Minnesota)
Chauvin Keith W. (University of Kansas)
Chintagunta Pradeep K. (University of Chicago)
Christiano Lawrence J. (Northwestern University)
Cochrane John (University of Chicago)
Coleman John (Duke University)
Constantinides George M. (University of Chicago)
Crain Robert (UC Berkeley)
Culp Christopher (University of Chicago)
Da Zhi (University of Notre Dame)
Davis Morris (University of Wisconsin)
De Marzo Peter (Stanford University)
Dubé Jean-Pierre H. (University of Chicago)
Edlin Aaron (UC Berkeley)
Eichenbaum Martin (Northwestern University)
Ely Jeffrey (Northwestern University)
Eraslan Hülya K. K.(Johns Hopkins University)
Faulhaber Gerald (University of Pennsylvania)
Feldmann Sven (University of Melbourne)
Fernandez-Villaverde Jesus (University of Pennsylvania)
Fohlin Caroline (Johns Hopkins University)
Fox Jeremy T. (University of Chicago)
Frank Murray Z.(University of Minnesota)
Frenzen Jonathan (University of Chicago)
Fuchs William (University of Chicago)
Fudenberg Drew (Harvard University)
Gabaix Xavier (New York University)
Gao Paul (Notre Dame University)
Garicano Luis (University of Chicago)
Gerakos Joseph J. (University of Chicago)
Gibbs Michael (University of Chicago)
Glomm Gerhard (Indiana University)
Goettler Ron (University of Chicago)
Goldin Claudia (Harvard University)
Gordon Robert J. (Northwestern University)
Greenstone Michael (Massachusetts Institute of Technology)
Guadalupe Maria (Columbia University)
Guerrieri Veronica (University of Chicago)
Hagerty Kathleen (Northwestern University)
Hamada Robert S. (University of Chicago)
Hansen Lars (University of Chicago)
Harris Milton (University of Chicago)
Hart Oliver (Harvard University)
Hazlett Thomas W. (George Mason University)
Heaton John (University of Chicago)
Heckman James (University of Chicago - Nobel Laureate)
Henderson David R. (Hoover Institution)
Henisz, Witold (University of Pennsylvania)
Hertzberg Andrew (Columbia University)
Hite Gailen (Columbia University)
Hitsch Günter J. (University of Chicago)
Hodrick Robert J. (Columbia University)
Hopenhayn Hugo (UCLA)
Hurst Erik (University of Chicago)
Imrohoroglu Ayse (University of Southern California)
Isakson Hans (University of Northern Iowa)
Israel Ronen (London Business School)
Jaffee Dwight M. (UC Berkeley)
Jagannathan Ravi (Northwestern University)
Jenter Dirk (Stanford University)
Jones Charles M. (Columbia Business School)
Kaboski Joseph P. (Ohio State University)
Kahn Matthew (UCLA)
Kaplan Ethan (Stockholm University)
Karolyi, Andrew (Ohio State University)
Kashyap Anil (University of Chicago)
Keim Donald B (University of Pennsylvania)
Ketkar Suhas L (Vanderbilt University)
Kiesling Lynne (Northwestern University)
Klenow Pete (Stanford University)
Koch Paul (University of Kansas)
Kocherlakota Narayana (University of Minnesota)
Koijen Ralph S.J. (University of Chicago)
Kondo Jiro (Northwestern University)
Korteweg Arthur (Stanford University)
Kortum Samuel (University of Chicago)
Krueger Dirk (University of Pennsylvania)
Ledesma Patricia (Northwestern University)
Lee Lung-fei (Ohio State University)
Leeper Eric M. (Indiana University)
Leuz Christian (University of Chicago)
Levine David I.(UC Berkeley)
Levine David K.(Washington University)
Levy David M. (George Mason University)
Linnainmaa Juhani (University of Chicago)
Lott John R. Jr. (University of Maryland)
Lucas Robert (University of Chicago - Nobel Laureate)
Luttmer Erzo G.J. (University of Minnesota)
Manski Charles F. (Northwestern University)
Martin Ian (Stanford University)
Mayer Christopher (Columbia University)
Mazzeo Michael (Northwestern University)
McDonald Robert (Northwestern University)
Meadow Scott F. (University of Chicago)
Mehra Rajnish (UC Santa Barbara)
Mian Atif (University of Chicago)
Middlebrook Art (University of Chicago)
Miguel Edward (UC Berkeley)
Miravete Eugenio J. (University of Texas at Austin)
Miron Jeffrey (Harvard University)
Moretti Enrico (UC Berkeley)
Moriguchi Chiaki (Northwestern University)
Moro Andrea (Vanderbilt University)
Morse Adair (University of Chicago)
Mortensen Dale T. (Northwestern University)
Mortimer Julie Holland (Harvard University)
Muralidharan Karthik (UC San Diego)
Nanda Dhananjay (University of Miami)
Nevo Aviv (Northwestern University)
Ohanian Lee (UCLA)
Pagliari Joseph (University of Chicago)
Papanikolaou Dimitris (Northwestern University)
Parker Jonathan (Northwestern University)
Paul Evans (Ohio State University)
Pejovich Svetozar (Steve) (Texas A&M University)
Peltzman Sam (University of Chicago)
Perri Fabrizio (University of Minnesota)
Phelan Christopher (University of Minnesota)
Piazzesi Monika (Stanford University)
Piskorski Tomasz (Columbia University)
Rampini Adriano (Duke University)
Reagan Patricia (Ohio State University)
Reich Michael (UC Berkeley)
Reuben Ernesto (Northwestern University)
Roberts Michael (University of Pennsylvania)
Robinson David (Duke University)
Rogers Michele (Northwestern University)
Rotella Elyce (Indiana University)
Ruud Paul (Vassar College)
Safford Sean (University of Chicago)
Sandbu Martin E. (University of Pennsylvania)
Sapienza Paola (Northwestern University)
Savor Pavel (University of Pennsylvania)
Scharfstein David (Harvard University)
Seim Katja (University of Pennsylvania)
Seru Amit (University of Chicago)
Shang-Jin Wei (Columbia University)
Shimer Robert (University of Chicago)
Shore Stephen H. (Johns Hopkins University)
Siegel Ron (Northwestern University)
Smith David C. (University of Virginia)
Smith Vernon L.(Chapman University- Nobel Laureate)
Sorensen Morten (Columbia University)
Spiegel Matthew (Yale University)
Stevenson Betsey (University of Pennsylvania)
Stokey Nancy (University of Chicago)
Strahan Philip (Boston College)
Strebulaev Ilya (Stanford University)
Sufi Amir (University of Chicago)
Tabarrok Alex (George Mason University)
Taylor Alan M. (UC Davis)
Thompson Tim (Northwestern University)
Tschoegl Adrian E. (University of Pennsylvania)
Uhlig Harald (University of Chicago)
Ulrich, Maxim (Columbia University)
Van Buskirk Andrew (University of Chicago)
Veronesi Pietro (University of Chicago)
Vissing-Jorgensen Annette (Northwestern University)
Wacziarg Romain (UCLA)
Weill Pierre-Olivier (UCLA)
Williamson Samuel H. (Miami University)
Witte Mark (Northwestern University)
Wolfers Justin (University of Pennsylvania)
Woutersen Tiemen (Johns Hopkins University)
Zingales Luigi (University of Chicago)
Zitzewitz Eric (Dartmouth College)

Source:

http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm

U.S. Losing Financial Super Power Status

2008-09-25T05:07:00.001-05:00

Human Psychology & Four Ways to spend money....

2008-09-23T17:16:00.011-05:00

Box#1 is a clear winner, because you have 100% Freedom of Choice.
Box#4 is a clear loser, because you have 0% Freedom of Choice.

Now, let's take current example of Fed & U.S. Treasury about to spend more than 1,000,000,000,000 (One Trillion) of US tax payers money to bail out big banks & other financials on Wall Street. Sounds familiar???? Box#4.....

God Bless America....

Big Brothers according to Milton Friedman

2008-09-23T16:51:00.002-05:00

Free Market Capitalism we had known one day

2008-09-23T16:40:00.004-05:00

First United States had "Free Market Capitalism".... Then there was an era of "Regulated Market Capitalism" after birth of Federal Reserve.....Now, we have a whole new thing called"Socialism Market Capitalism"..... Socialism for rich..........

What would be the after effects of this Socialism in the country according to Milton Friedman?

Economist Mishkin: Situation Worse Than the Depression

2008-09-23T16:27:00.003-05:00

Kevin Phillips on Bill Moyers

2008-09-21T12:30:00.007-05:00

Seven Sharks according to Kevin Phillips

Financialization
Huge built up of U.S. debt
Home prices collapsing
Global Commodity inflation building up
Fraud Government Statistics
Peak Oil-Shortage of Oil
Collapsing Dollar

Who is Kevin Phillips?

Nationalisation ≠ Currency Weakness by Stephen Jen & Spyros Andreopoulos

2008-09-20T13:49:00.002-05:00

"Summary and Conclusions

Conventional wisdom has it that, as a government fiscalises the contingent liabilities of nationalised banks, the currency of the country in question should depreciate. More generally, banking crises are, very often, accompanied by balance of payments (or currency) crises. The US, being a country with still out-sized ‘twin deficits’ (fiscal and external deficits), will likely see the dollar weaken because of the Treasury and the Fed’s decision to effectively nationalise some of the large financial institutions, so the argument goes. An inconvenient fact, however, is that nationalisation of banks, historically, did not tend to lead to further currency weakness. In fact, very often the financial sector and the currency in question reach a trough just as the government takes steps to address the banking crisis. Thus, currency weakness tends to precede, not follow nationalisation.

Popular Thesis on Nationalisation and the Dollar

The notion that nationalisation of banks should lead to currency weakness is popular mainly because it is intuitive. Since nationalisation of banks is ‘not good news’, and runs counter to the principles of capitalism and the free market, some have the visceral reaction to sell the currency in question.

Further, as highlighted by Kaminsky and Reinhart (K&R) (see Graciela Kaminsky and Carmen Reinhart (1999), “The Twin Crises: The Causes of Banking and Balance-of-Payments Problems”, The American Economic Review 89: 3, June), there are many historical examples of ‘twin crises’, whereby banking crises and currency crises occurred simultaneously. The more memorable examples include Argentina in the early 1980s, Sweden and Norway in the early 1990s, Japan in the late 1990s and Thailand in the late 1990s. In fact, K&R found that, during 1980-1995, of the 23 banking crises, 18 were accompanied by balance-of-payments crises.

This link between banking crises and currency crises is genuine, and the usual dynamics are well-summarised by ex-Governor of the Riksbank (Sweden’s central bank) Mr. Bäckström (see What Lessons Can Be Learned from Recent Financial Crises? The Swedish Experience, Kansas City Fed Seminar in Jackson Hole, August 1997): “Credit market deregulation in 1985 … meant that the monetary conditions became more expansionary. This coincided, moreover, with rising activity, relatively high inflation expectations, … (T)he freer credit market led to a rapidly growing stock of debt… The credit boom coincided with rising share and real estate prices… The expansion of credit was also associated with increased real economic demand. Private financial savings dropped by as much as 7 percentage points of GDP and turned negative. The economy became overheated and inflation accelerated. Sizeable C/A deficits, accompanied by large outflows of … capital, led to a growing stock of private sector short-term debt in foreign currency”. This description applies quite well to the US right now.

Moreover, nationalisation of banks will increase the fiscal burden of the government. For a country that already has a large fiscal deficit, this is clearly negative for the interest rate outlook. For one that also has an external deficit, a large public borrowing need, ceteris paribus, should translate into a weaker currency, so the logic goes. At the same time, the central bank may be tempted to ‘monetise’ the debt, or run a monetary stance that is easier than otherwise – again currency-negative.

The Inconvenient Historical Fact

While the arguments above may sound logical and compelling to many, the inconvenient fact is that the historical pattern of how currencies perform before and after nationalisation or bail-outs tells a very different story. Averaged across five episodes of prominent banking crises, the nominal exchange rate tended to fall before nationalisation, but rise thereafter.

The historical pattern suggests that financial markets tend to be forward-looking and try to price in the deterioration in the state of the banking system by selling down the currency and financial sector stocks, but the government is usually not compelled to act until conditions deteriorate significantly. As a result, more often than not, government interventions have coincided with the lows in currency values. In other words, even though K&R’s observation that currency crises often occur simultaneously with banking crises is correct, there is no strong proof that nationalisation leads to further currency weakness.

Other more visible examples are consistent with this link between banking crises and currency crises. The S&L Crisis and its bail-out spanned a protracted period of time. The dollar index did continue to fall from 1986 – the beginning of the S&L Crisis – until 1989 or so. (In 1986, the FSLIC (Federal Savings and Loan Insurance Corporation) – the deposit insurance scheme funded by the thrift industry but guaranteed by the government – first reported being insolvent (incidentally, the main reason why 1986 is remembered as the beginning of the S&L Crisis). The RTC (Resolution Trust Corporation) was established in 1989, and by 2003, the RTC had ‘resolved’ US$394 billion worth of non-performing assets of US savings and loans. (The total cost of the clean-up of the US S&L Crisis reached US$153 billion, in ‘current’ terms equivalent to some 2.6% of US GDP in 1991. This translates to US$375 billion in 2008 dollar terms.) The dollar index essentially moved sideways in the early 1990s. The dollar did falter in 1994/95, but that was attributed more to the inflation scare than to the S&L Crisis. Similarly, Japan’s government did not explicitly address its banking crisis until 1998-99 and again in 2002-03. After each episode, USD/JPY actually collapsed toward 100, i.e., JPY strengthened in the ensuing quarters. Finally, in the case of Thailand, the banking crisis did indeed lead the currency crisis. But bank bail-outs did not take place until 1998, and USD/THB drifted in the 36-42 range between 1998 and 2000 – significantly below the peak of 56 reached in January 1998.

The case of the US at present is also illustrative. Between the onset of the credit crisis in August 2007 and the collapse of Bear Stearns on March 16, 2008, EUR/USD rose from 1.35 to 1.58, and lingered around the latter level as the Fed and Treasury assisted other financial institutions in the subsequent months. Since July, EUR/USD has collapsed from 1.60 to a low of 1.39 last week. Even with recent dramatic events, there is no evidence that ‘nationalisation = currency weakness’. If anything, the dollar has held up remarkably well this week, despite several dollar-negative factors, including: (i) a higher probability of the Fed cutting the FFR than the ECB reducing the refi rate; (ii) a diluted Fed balance sheet, from the substitution of US Treasuries for other lower-rated securities; and (iii) large increases in the future fiscal burden of the US, from the contingent liabilities that are fiscalised. In fact, the only dollar-positive factor this past week was lower oil prices. EUR/USD seems to be drifting back toward 1.45, but we see this move as rather innocuous, given the severity of the financial stress in the US.

In sum, banking crises are unambiguously bad for currencies, but nationalisation per se does not make the situation worse for currencies. In fact, it often marks the low in the currencies.

The US Fiscal Worries Over the Medium Term

Having said the above, the US does have quite a worrisome fiscal outlook in the years ahead, which may eventually have an impact on the dollar. Setting aside the issue of the fiscal burden associated with the assistance the official sector has provided the financial sector, US expenditures may be too high and revenue buoyancy may be undermined by the weak equity and property markets.

The Congressional Budget Office (CBO) released its budget update last week, and predicted that the US federal deficit will rise from US$161 billion (1.2% of GDP) in 2007 to US$407 billion (2.9%) in 2008. This sharp deterioration in the fiscal balance reflects a simultaneous increase in spending and a decline in tax revenues. (Total government spending will increase by US$226 billion, to close to US$3.0 trillion, reflecting both discretionary and mandatory spending.) The CBO forecasts that deficits will remain above US$400 billion in each of the next two years.

Investors will likely see it as key for the next Administration to control spending. However, it is also important for investors to appreciate how sensitive US revenue collection is to GDP. During 2001-02, for example, as the US economy fell into a brief recession, revenue collection plummeted from 21% of GDP to close to 16%. Thus, the strength of the US economic recovery in the coming years will have important implications for the overall budget position. These fundamental trends in revenue collection and ‘core’ spending are at least as important as the costs associated with nationalisation. The performance of the dollar in the coming years will, therefore, be a function of how the US government deals with spending and how rapidly the US economy recovers, in our view.

Bottom Line

Banking crises are bad for currencies, but nationalisation per se does not necessarily make it worse for currencies. In fact, it often marks the low in the currencies. We believe this is the case for the dollar in the current episode. What remains a lingering risk for the dollar over the medium term is the US fiscal position, unrelated to the costs of nationalisation."

Source:

http://www.morganstanley.com/views/gef/archive/2008/20080919-Fri.html#anchor6931

Peter Schiff on CNN

2008-09-20T13:10:00.002-05:00

What's hot in investment right now?

2008-09-20T12:16:00.003-05:00

Source:
WSJ

Krugman on U.S. Goverment's Trillions Dollar bailout

2008-09-20T12:09:00.002-05:00

"This is not a stimulus to the economy. It's just try to stop bleeding."

Cable's correlation coefficient with Euro is back

2008-09-19T04:36:00.005-05:00

From beginning of August this year, GBP/USD & EUR/USD correlation coefficient is more than 0.90. Let's see how long will it last. USD/JPY is already off the correlation with AUD, EUR & CHF. But Cable joins The Party now. ;)

Happy Trading.....

Latest on North American Union: Ex Mexico President Vincent Fox

2008-09-19T04:36:00.002-05:00

http://www.spp.gov/
http://www.agoracosmopolitan.com/home/Frontpage/2008/09/15/02612.html

Worst crisis since 1930's: WSJ

2008-09-18T05:55:00.005-05:00

Source: Wall Street Journal

Finally WSJ admits that these crisis are worst since Great Depression. I wonder when McCain & Obama will admit that. They both have same policies & they are called "SPENDINGS, BUT NO SAVINGS." Funnily enough current president of United States is saying that "WE ARE JUST HAVING SMALL CORRECTION."

SPX daily vs. SPX weekly

2008-09-17T15:14:00.004-05:00

Previous S&P 500 weekly analysis post

Going short GBPUSD

2008-09-17T14:37:00.000-05:00

Biggest one day gain for Gold

2008-09-17T13:34:00.002-05:00

Source: CNBC

Awesome interactive of US Financials by NY Times

2008-09-17T11:55:00.003-05:00

This is an amazing interactive created by NY TIMES. I am really amazed by their work. There are total 29 US Financial Firms who have already lost 1.86 TRILLION US $$$$. And their total exposure is into TRILLIONS.... Biggest ever in History of market.... Fasten your seat belts, a lot more to come.

EUR-GOLD-AUD

2008-09-17T11:08:00.007-05:00

Gold has risen so far near 53$ today, but AUD & EUR have failed to make highs against US Dollar. It is not a divergence of Gold with EUR & AUD to go long against US Dollar. So, be cautious in placing long EUR/USD or AUD/USD or USD/CHF short. Gold is in actual bull mood today due to money supply increased drastically by ECB, RBA & Fed.

Following charts are Gold against EUR, Gold/AUD, Gold/JPY

Cognitrend USDJPY model for till Nov. '08

2008-09-17T09:26:00.008-05:00

I was doing some research on Behavioral Finance with FX market & found this site called Cognitrend. They are leading FX analyst with Deutsche Bank. I don't know how accurate their models are, but worth a shot.

Sources:
Cognitrend
DB-Markets

Paul Van Eden on Gold

2008-09-17T09:13:00.003-05:00

In previous article I said increase gold demand from India may boost price of gold in short term, but one of Gold expert in modern market has something simple & different view.
Rest of the article.....

After all these this week's financial mess- now what?

2008-09-16T20:44:00.007-05:00

After pumping $200 billion by central banks around the globe + Fed's bailing out role of AIG, MER-BOA, GS, JP Morgan things, market should calm down at least for a while. I am expecting new buyers to kick in & SPX should go back up near 1300 until next big news comes out.

Crude oil is down & there is temporary enough liquidity in market. Fed & other central banks are really committed to continue their Term Auction Facility program to pump up money. So, I am not seeing any other reasons right now for SPX, not to go back 1300 in coming months.
That means, USD/JPY back to previous key level of 108-109.

EUR/USD should remain in pressure due to ECB's dovishness towards interest rate. Check previous post on currency analysis for detail fundamental view.

I'll be watching Gold really carefully becase in India key festival season (Diwali) of the year is coming next month. India is the largest consumer of Gold. If consumer demand increases for gold for the season more than expected than surely there'll temporary rise on AUD & EUR, but rise would be really limited.

So, let's keep watching volume & open interest and make some money.

Happy trading.

AIG Conservatorship by Fed

2008-09-16T19:06:00.005-05:00

Source: NY Times

FOMC detail statement of September 16, 2008

2008-09-16T18:59:00.002-05:00

Source: wsj
FOMC September 16th, 2008 vs. August 5th, 2008

Can US Treasury also bailout AIG after BearStern, FNM, FRE?

2008-09-16T18:33:00.001-05:00

Central Banks injects free money into Market

2008-09-16T07:37:00.003-05:00

more....

Nouriel Roubini on Bloomberg

2008-09-15T08:45:00.002-05:00

Short History of LEH

2008-09-15T08:35:00.007-05:00

Wooaah...What!!! Yeah, it's pretty bad outtt there...

2008-09-14T17:23:00.002-05:00

A Worrying new world order

2008-09-13T13:00:00.003-05:00

Link

Cognitive Learning of Market

2008-09-12T10:07:00.003-05:00

Other Links....
http://www.traderfeed.blogspot.com/
http://www.brettsteenbarger.com/weblog.htm

ECB Officials Say Europe Could Face Recession

2008-09-12T08:46:00.001-05:00

via Wall Street Journal

AUD/USD into the mid-$0.70s range?

2008-09-12T07:15:00.000-05:00

How to play JPY short term

2008-09-12T06:58:00.005-05:00

Bailouts Will Push US into Depression: Manager

2008-09-12T06:48:00.002-05:00

Via CNBC...

The end result of the global economic slowdown may be the U.S. announcing national bankruptcy as the government cannot afford the bailouts that it promised and the market will not bail out the government, Martin Hennecke, senior manager of private clients at Tyche, told CNBC on Thursday.

"We expect a depression in the United States. We expect a depression, very possibly, also in Europe," Hennecke said on "Worldwide Exchange."

Correlation Analysis based on Fundamentals

2008-09-11T11:57:00.008-05:00

2007 Currency Market Correlations Outlines:

Foreign Banks(ECB, RBA, RBNZ, BOC, BOE) were raising Interest Rates because of their Inflation Focused policies.

Inflation - Higher Crude Oil price were leading to higher prices of goods & slowing spending.

Foreign Banks were not lowering Interest Rates because they were not hit that much on Banking/Credit crisis compare to United States. Instead lowering rates, they started lending money through Term Auction Facilities to various Banks.

Due to declining growth in United States, high crude oil price & credit problems, Japan/Asia was having less exports to US which made JPY to rise & carry trades started declining since then.

So, that is why due to Higher Interest Rates in G7 nations & rise in commodities AUD, NZ, EUR were gaining while at same time due to credit problems in USD/ JPY was also gaining. Correlation Coefficient between JPY and other majors at that time was high.
*************************************************************************************

Swissie has largest exports-imports to EU nations compare to other G7 countries like US, AUD, JPY, so naturally Swissie would follow direction of EURO. US Dollar/Swiss Franc & Euro/US Dollar has >0.95 correlation coefficient.

Britain also got into trouble of Inflation & Credit Crunch immidiately after US sneezzed. Bank of England started lowering interest rate from end of 2007. GBP/USD had high correlation with EUR/USD, AUD/USD, USD/JPY, USD/CHF until end of November 2007. But since BOE officials started talking about lowering interest rates GBP lost correlation since then with other majors.

Canadian Dollar made highest high against US Dollar in first week of November '07. BOC started lowering interst rate from first week of December '07. Since Canadians & Americans both were lowering rates at same time, USD/CAD remained sideways for long time until first week of August '08. US & Canada are biggest exporter/importer to each other.

Australian Dollar started falling big time from end of July '08. Australia is one of the largest exporter of metals to world. As we noticed Gold had failed to make new high in that month. Also, crude oil started declining after $146 high due to big time slow down (less demand) in United States & Britain. Land of Aussies also had somewhat effect on US/Britain Credit Crunch. Less demand of commodities & metals made Aussie Dollar drop big time. Low prices of commodities help somewhat RBA to fight inflation. But due to credit worries AUS was also forced to join Kiwis, Canadians, Americans & Britishers.

EUR/USD exchage rate decline was mainly by two factors: drop in commodities & slowing down in German Businesses. Euro holds 57.6% of US Dollar Index & we know that Gold and US Dollar has inverse connection. So, naturally Euro has to fall with falling price of Gold. Germany factory orders has declined big time since April of this year which also contributed falling price of EURO big time. ECB is still fighting with Credit Crunch & bank problems which started in United States. Trichet in last meeting already mentioned that ECB is not planning to raise interest rate in this year. Therefore traders started betting towards short side of EUR/USD.
*************************************************************************************

So now what in last quater of 2008 & 2009?
ECB will have to lower interest rate sooner in next meeting or meeting after due to demand of credit expansion in Euro Zone. Banks are still in trouble in United States & having their global effect. Slowing down in consumer spending & businesses in Germany & other EU Nations will make ECB to lower interest rate soon. Right now, EUR/USD is being traded near 1.39. And since we are expecting lowering rate from ECB soon, next stop for EUR/USD are 1.35 & 1.32.

Swissie will follow direction of EUR & Gold since it also has safe haven status due to SNB's gold reserve.

Aussie will depend on rise & fall on prices of commodities. Since ECB will lower interest rate next, Gold & Silver will fall further & it'll make AUD more weaker. On weekly chart, AUD hasn't made lower high yet, but 7% interest rate from 7.25% has already lowered demand of AUD a bit. AUD may fall further if credit expansion demand increases & retail sales, factory orders of metals/commodities declines. Recently RBNZ has lowered interest rate to 7.50% from 8.00% which gives us higher probability that RBA will also soon lower rate speaking from AUD-NZD correlation ratio.

We don't know how many more write downs are coming. And I am already bearish on SPX & Nikkei (less demand of Japanese goods due slow down in United States) which will make JPY only stronger. JPY will test previous lows against USD if it fails to hold current daily time frame channle.

GBP can go only one way due to Banking problems & slowing down in British Pound. It may rise against EUR once ECB reduces interest rate. GBP ain't world's reserve currency, so hypothesis like The Dollar Smile cannot be applied on Cable.

Swissie will follow direction of EUR & Gold since it also has safe haven status due to SNB's gold reserve.

Canadian Dollar is also solid on selling side because of it's heavy exports of commodity products to United States.

I am not expecting for Fed to raise interest rate until banks hit the bottom. So far there are no signs of Financials in United States hitting bottom, not till 2009. But US Dollar will continue strenghning, not because US has solid economy, but rest of world is slowing down.

Note:

Correlation Coefficient ratio of JPY with EUR, AUD & SWISSIE & GOLD, Oil is <>
JPY still has strong correlation coefficient ratio with Nikkie, SPX, VIX & TNX.
GBP & CAD are now somewhat back with a bit strong correlation ration with EUR, SWISSIE & AUD.
Situation will be different if ECB doesn't lower the rate as expected & some unexpected Geopolitics plays a big role in Crude Oil.

Dollar Smile Hypothesis advanced by Stephen Jen on FT

2008-09-11T10:37:00.005-05:00

"This held that the dollar had a “convex” relationship to US economic growth.

On this theory, if the US economy goes into a severe decline, or hard landing, then the dollar should rise. The rest of the world suffers, and the dollar is a relative safe haven.

If the US economy goes on a growth spurt, outpacing the rest of the world, the dollar gains.

But between these two outcomes lies a “soft landing”, where the US economy muddles through. If this happens, the dollar gets pummelled. Other countries have higher interest rates, and there is nothing to defend the dollar."

After Lehman who could be next?

2008-09-11T09:57:00.002-05:00

Dark line represents Capital Raised
Light line represents Write Downs & Loses.....

FNM & FRE lobbyist to McCain & Obama

2008-09-10T11:46:00.003-05:00

Another Bail Out is coming: It's AUTO LOANS of at least 25 Billion$$$$$

2008-09-10T11:38:00.003-05:00

Peter Schiff & Professor Steven Keen

2008-09-10T10:53:00.003-05:00

Part 1

Part 2

Gandalf of Lord of the Rings & Congressman Ron Paul

2008-09-09T19:18:00.000-05:00

EUR-GOLD-AUD weekly support/resistance

2008-09-09T09:49:00.005-05:00

I am really not expecting for GOLD to break current weekly trend line support. Therefore AUD & EUR to remain more sideways instead of keep falling further. EUR may fall further more to 1.3850 by looking @ support area. Keep watching Fundamentals...

Learn how US Senate & "Democracy" works

2008-09-09T09:17:00.000-05:00

Russia sends nuclear cruiser to Caribbean

2008-09-09T09:13:00.003-05:00

Jim Rogers on US Socialism

2008-09-08T13:48:00.000-05:00

Jim Cramer on Fannie & Fraddie few days back & now.

2008-09-08T13:33:00.001-05:00

Paul Volker: "Finance System `Broken,' Losses May Rise."

2008-09-07T10:45:00.001-05:00

Analyzing August's Unemployment Rate

2008-09-06T14:55:00.002-05:00

http://www.nytimes.com/2008/09/06/business/economy/06econ.html?pagewanted=2&ref=economy

Understanding Fannie's Role

2008-09-06T14:33:00.003-05:00

Source:
http://www.nytimes.com/imagepages/2008/09/06/business/20080906_Fannie_graphic.ready.html

Treasury set to bail out Fannie Mae & Freddie Mac.
http://www.marketwatch.com/news/story/treasury-reportedly-set-bail-out/story.aspx?guid={46D1439E-A2C4-418C-9BE0-09BE0B9EE60D}

What will happen to US Dollar now?
Over short term US Dollar may increase in value, but there will be virtually near 12 TRILLION new US DOLLARs will be pumped into market by Treasury & it'll make US Dollar more weaker over long term.

Always follow TNX, JPY & SPX togather..

2008-09-05T14:03:00.005-05:00

Last week, I had said that I am bearish on SPX & my medium term targets were already posted before that. Market came close to last low of 1200, but it failed to make double bottom pattern on medium term.

Before SPX started going down this WEEK, TNX was already making big bearish candles & JPY had already started showing bullish signs against Dollar as well as GBP, EUR & AUD. So, it was a very clear signal that drop on SPX was coming. I told many of you on Wednesday about it.

I'll post update on charts once market close today & after I get all volume & open interest detail.

From now on I am not gonna do biweekly analysis of market like usual, only weekly analysis. I am getting none to very little feedback. So if you interested in daily or biweekly analysis, email me. I'll respond it.

Later u all....

Spare me a quadrillion – only in a land of zeros

2008-09-03T19:52:00.001-05:00

"1,000,000,000,000,000. That’s right, a quadrillion is a thousand trillion. These are the numbers Zimbabweans have to deal with when going about fairly modest everyday transactions. The sad truth is that hyperinflation is just one of the many items the country’s despotic ruler, Robert Mugabe, can list on his bio.

The check below, drawn on the MBCA bank in Zimbabwe, has just crossed my path. It is for Z$1.072 quadrillion which, as far as I can establish, equates to about US$27, but that is a rapidly moving target. Adding “only” to the amount in words and the “00″ cents to the figures must be a matter of habit!

The check is dated July 23, just prior to the Zim dollar having had 10 zeros cut off on August 1. But don’t hold your breath for an end to the erosion of the currency value, at least not while crazy Bob is calling the shots."

Sources:

http://www.investmentpostcards.com/2008/09/03/spare-me-a-quadrillion-–-only-in-a-land-of-zeros/

http://bigpicture.typepad.com/

Rick Santelli Strikes Again

2008-09-03T12:00:00.000-05:00

Bye bye US Dollar Hegemony

2008-08-30T13:35:00.003-05:00

Abandon USA accounting rules & GO GLOBAL

2008-08-30T12:16:00.004-05:00

"The Securities and Exchange Commission may let large U.S. companies switch to international accounting rules in six years, a step it says will lower compliance costs and make American firms more competitive.

SEC commissioners today approved a ``road map'' that might allow corporations with market values exceeding $700 million to abandon U.S. accounting standards by 2014. Under the plan, about 110 U.S. companies that are global leaders in their industries may move to international rules as soon as 2010.

``A global set of high-quality accounting standards would be an international language of disclosure, transparency and comparability,'' SEC Chairman Christopher Cox said at an open meeting in Washington. ``It's a goal worth pursuing.''

Meshing U.S. regulations with rules adopted by other countries is a priority for the agency, which has said companies will be able to reduce expenses by eliminating duplicate accounting. Investors will benefit because they ultimately bear the burden of higher compliance costs, SEC officials argue.

Critics, such as U.S. Senator Jack Reed, a Rhode Island Democrat who heads a subcommittee that oversees the SEC, have said the agency may put investors at risk by outsourcing its oversight to less-aggressive regulators......."

more via BLOOMBERG
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vnSDDezhP0rc.asf

Note: BE CAREFUL BUYING SOME STOCKS OF BIG CAPS TO SMALL CAPS.

New Text Books should be written on Accounting, Market Analysis for Public Schools. What Public Schools teach & where MARKET is going, they don't match...

Jim Cramer & Anti Jim Cramer

2008-08-29T09:30:00.004-05:00

How much to trust Jim Cramer?

Another Video from Don Harold posted yesterday.

For more, http://www.youtube.com/user/donharrold

US Banks Exposures

2008-08-29T08:09:00.008-05:00

Bottom on financials are still far away... Look @ this chart of Total Borrowings of Depository Institutes since 1985. Once that chart is normal, I can tell Financials have hit the bottom. What mainstream media says right now doesn't matter.Highest Exposure: 90 Trillion JP Morgan. Like Barry said on Big Picture, "No wonder the Fed "rescue" of Bear Stearns was via JPM -- it was their own derivative exposure that was at risk. "Sources:
http://bigpicture.typepad.com/comments/credit/index.html
http://research.stlouisfed.org/fred2/

AUD/USD & EUR/USD divergence

2008-08-29T08:01:00.006-05:00

This 480 minuntes chart has 3 month EURODOLLAR interest rate, GERMAN BUND & EUR/USD. Currenly we are seeing divergence in EuroDollar Interest Rate & EUR/USD rate.
There is also technical RSI divergence is happening on daily EUR/USD & AUD/USD.

For further research on EUR, US Dollar & Gold, I would recommend to look @ Paul Van Eden
http://watch.bnn.ca/trading-day/august-2008/trading-day-august-19-2008/#clip84424EUR/USD
AUD/USD

SPX, JPY, TNX, TYX, FVX, IRX

2008-08-29T07:40:00.008-05:00

As you notice here, TNX & USDJPY are currently strongly bearish. So I wouldn't call SPX rally bullish. I am still bearish on SPX. I am not expecting it to break above 1300 anytime soon until TNX & JPY reverses.

SPX
USD/JPY
TNX- 10 Year TreasuryI was comparing Bond yields the other day to see how it can reflect SPX. Short Term yields are stable compare to 10 year & 30 year returns. It is not a good scenario for SPX when all yields are moving closely. You can compare that by going

TYX - 30 Year TreasuryFYX- 5 Year TreasuryIRX- 13 Weeks Treasury Bill

Long Term Carry Trade Portfolio

2008-08-27T08:44:00.005-05:00

These are charts of EUR/USD, GOLD & AUD/USD. They all are testing weekly Trendline. If you are long term CARRY TRADE investor, stay alert for Long position on Aussie & Euro.

Note: Red price boxes are support & resistance levels.

Must Watch Movie: I.O.U.S.A.

2008-08-25T12:59:00.003-05:00

More Clips: http://www.youtube.com/profile_videos?user=IOUSAtheMovie
Website: http://www.iousathemovie.com/

COT report this week

2008-08-25T12:06:00.003-05:00

Source: Danske Bank

Market Themes

2008-08-25T10:45:00.002-05:00

"With increasing globalization, every asset class is related to every other one. This makes it useful for understanding how these relationships shift over time. Many times, movements in one asset class will anticipate movements in others. With an understanding of how these different groups are moving--stocks, bonds, interest rates, and commodities--we can appreciate the themes that are driving markets that day.

Since 2007, on days when the euro (FXE) has risen versus the U.S. dollar, the average price change in the S&P 500 Index (SPY) has been -.15% (107 occasions up, 112 down). When the U.S. dollar has risen versus the euro, the average price change in the S&P 500 Index has been .14% (112 up, 83 down).

On days in which the euro has risen versus the U.S. dollar, the average price change for commodities (DBC) has been .42% (137 occasions up, 82 down). When the dollar has risen versus the euro, the average price change in commodities has been -.22% (91 up, 104 down).

When the euro has risen versus the dollar, the average price change for oil (USO) has been .59% (130 occasions up, 89 down). When the dollar has risen versus the euro, the average price change in oil has been -.32% (88 up, 107 down).

When short-term Treasury notes (SHY) have risen in price (yields falling), the average change in SPY has been -.42% (83 up, 136 down). When Treasury notes have fallen in price (yields rising), the average price change in SPY has been .44% (136 up, 59 down). When short-term notes have risen in price, USO has averaged a gain of .24% (123 up, 96 down). When short-term notes have fallen, USO has averaged a gain of .07% (105 up, 90 down).

These are not permanent relationships that serve as the basis for mechanical trading. Rather, they are correlations that reflect broad themes such as recession concerns, inflation worries, and the like. By understanding how asset classes are moving--and moving relative to each other--we can gain insight into the mindsets of institutional money managers."

- Brett Steenbarger

Dr. Steenbarger has sum up my entire correlation system in very effective way in his financial blog TraderFeed. Thank You Dr. Steenbarger.

Classic 240 Minutes RSI Divergences

2008-08-19T11:05:00.007-05:00

COT this week

2008-08-18T09:01:00.002-05:00

Speculative positions in FX market shows more strength in US Dollar against all major this week.
Source: DANSKE BANK

Gold is still in Game.

2008-08-17T13:14:00.001-05:00

This week in Japan...

2008-08-17T13:08:00.001-05:00

USDCAD position closed

2008-08-14T09:30:00.004-05:00

USDCAD closed @ 1.0558 this early morning with -62 pips.

Total Week Gain/Loss:
AUD/USD -108 pips
EURCAD +258 pips
USDCAD -62 pips
---------------------
Total +88 pips

More orders will be placed this afternoon.

Stay tuned.

FX G7 Barometer

2008-08-12T20:05:00.001-05:00

How to use FX Barometer?
Upper currency futures are the strongest ones.
Lower currency futures are the weakest ones.

Example:
In Medium Term chart, US Dollar is strongest & JPY is weakest speaking from Foreign Exchange Investment Cash Flow Theory. Therefore, due to US Dollar Over Bought status, SHORT USD/JPY will be the best REVERSAL TRADE followed by USDCHF Short.

OR...

If the fundamentals are well placed with technicals, buying strongest currency would be rewarded as well. For example, AUD vs. USD in short term chart. USD strongest, AUD weakest.

SHORT TERM: 60 mins time frame
MEDIUM TERM: 240 mins time frame.You can also use alternative Barometer here on 4X Lounge.
Above 75 is overbought; below 25 is oversold.

TNX vs. SPX vs. USDJPY Analysis

2008-08-12T15:28:00.000-05:00

10 Year Treasury Note has failed to maintain its bullishness on daily time frame. That means bearish SPX & bearish USD/JPY. US Dollar is extreme over bought in short term & Gold is over sold with Crude Oil. I am watching AUD very closely for Gold. If RBA lowers interest rate despite of higher inflation in Australia, it'll effect Gold price uniquely. We'll see how much AUD goes off the correlation with Gold then.

SPX has made false break out speaking from Rising Wedge Pattern. Now, it is more clearer by looking at TNX charts that it's continue bearish trend since doji has failed to reverse trend as I had mentioned in August 10th pos t. I have already posted my bearish target levels for SPX in that post.

On the other hand, JPY has gained sharply today against US Dollar as well as EUR, GBP & AUD. I am bearish on USD/JPY as many of you know. I posted detailed chart analysis of USD/JPY on A ugust 7th. I still stand for that. :) Below here is the current chart of USD/JPY(daily). As you can see there is some Rising Wedge Pattern here as well. If rising wedge pattern analysis is true, then big drop is coming soon on both SPX & USD/JPY, but for that TNX has to break downward current trend as well. So, keep watching all three. Happy Trading......

ITF Interim Report on Crude Oil

2008-08-12T10:38:00.000-05:00

Conclusion:
Sources:

http://www.cftc.gov/stellent/groups/public/@newsroom/documents/file/itfinterimreportoncrudeoil0708.pdf

Big Picture