Wednesday March 17, 2010 - 12:51:26 GMT
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Black Swan Capital - www.blackswantrading.com
If Richard is right the US smokes Europe!
U.K. jobless claims unexpectedly fell in February at the fastest pace since 1997. (Bloomberg)
China is in the midst of â€śthe greatest bubble in history,â€ť said James Rickards, former general counsel of hedge fund Long-Term Capital Management LP. (Bloomberg)
â€śThe first thing a man will do for his ideals is lie.â€ť â€” Joseph A. Schumpeter
FX Trading â€“ If Richard is right the US smokes Europe!
Last month, we did notice that US consumer credit rose unexpectedly. It didnâ€™t seem to get much press, as all eyes were focused on non-farm payroll. [Chart not available in text format.]
The question is: Is a snapback coming? Yes, answers Morgan Stanleyâ€™s Richard Berner [our emphasis]:
Private credit demands are poised to rebound, following a record-setting bust over the past 18 months. The bursting of the housing and credit bubbles promoted massive loan losses that decimated the capital at leveraged lenders, forced deleveraging of intermediaries' balance sheets and promoted the most severe credit crunch in 70 years. In our view, that sudden withdrawal of credit availability, which actually began in the fall of 2007, was the primary factor promoting recession. Conversely, we also believe that the ebbing of the credit crunch has encouraged economic recovery, aided mightily by aggressive policy stimulus. But the sharp decline in credit demands continued in the fourth quarter and has yet to reverse.
That reversal is coming. While it has been painful and is yet incomplete, the credit crunch has promoted a financial purging and healing process that has been even more rapid than we expected ten months ago when we last estimated system-wide credit losses. Household deleveraging and rising wealth have substantially restored balance sheet health and, coupled with increasing income, have given consumers more wherewithal and confidence to borrow again. For its part, Corporate America will likely soon start accumulating inventories and boosting capex, perhaps sooner than expected. We expect that the combination of rising household and corporate credit demands and massive Treasury borrowing needs will put significant upward pressure on real yields in 2010-11.
If Mr. Berner is right:
US growth smokes Europe. Itâ€™s unlikely the average European consumer will snap back while mired in the midst of austerity. It means rallies in EURUSD are opportunities to sell the pair at a better price
Black Swan Capital
Currencies are another asset class â€¦
David Newman hereâ€¦ â€śInvesting vs. Tradingâ€ť
How many times have you seen pictures of people sitting on the beach with their laptop in hand in those â€śTrade Forex, Commission-Free!â€ť advertisements? â€śOpen an FX account, quit your real job, sit on the beach and get richâ€ť is the implicit message. Itâ€™s ridiculous! But unfortunately that is what sells.
It doesnâ€™t have to be that way. You donâ€™t have to buy into the hype ... and you donâ€™t have to take that much risk in order to get involved in currencies. Trading can be profitable; but it requires extreme focus and discipline. There is another way if you want to â€śinvestâ€ť in currencies.
Investing in currencies for the long haul means using currencies as another asset class in your portfolio. An asset class that will stand along stocks and bonds and hopefully
provide some much needed diversification.
There are plenty of low leveraged long-term investment choices available to you so you can make real money in currencies. They are called Currency Exchange Traded Funds (ETFs).
An ETF is a simple straightforward currency product that you can buy and sell in your standard equity brokerage account. Itâ€™s the same as buying any other fund traded on the exchange. We offer recommendations on Currency ETFs in our month Currency Investor newsletter. We donâ€™t recommend trading them; we do recommend investing in them using a long-term buy and hold strategy.
To sum it up: Our monthly Currency Investor newsletter is geared toward newcomers and experienced investors who are looking for a conservative approach to the foreign exchange market, and learning more about how the global economy works.
In plain language we deliver global macroeconomic analysis and actionable ideas geared toward exchange rate fluctuations over time.
Our analysis is comprehensible and our recommendations consist of ETFs, as I said. So donâ€™t get turned off by buzz words like â€śexchange ratesâ€ť or â€śforeign exchangeâ€ť â€“ this investing strategy is as easy to implement as buying and selling stocks.
Plus, at $39 per year itâ€™s a deal youâ€™d be hard-pressed to find anywhere else.
Thorough global analysis plus complete investment guidance ... and all for only $39 per year? You can become a Member of our Currency Investor service at our homepage via credit card or PayPal.
All the best,
Director of Sales and Marketing
Black Swan Capital [email protected]
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