Tuesday May 25, 2010 - 12:55:20 GMT
Share This Story
Black Swan Capital - www.blackswantrading.com
Have we stopped listening to Geithner yet?Key News
- Europe's Banks Hit by Loan Costs (Wall Street Journal)
- Junk-Rated Firms Shut Out The worst rout in the junk-bond market since the depths of the financial crisis is hurting companies' ability to raise money. Allegiant Travel withdrew a planned $250 million bond sale, citing adverse market conditions. (Wall Street Journal)
- American Jobbery Act (Wall Street Journal)
â€śThe winds and waves are always on the side of the ablest navigators.â€ť â€”Edward Gibbon FX Trading â€“ Have we stopped listening to Geithner yet?
The US Treasury Secretary has been in China, tip-toeing around yuan exchange rate reform, Chinese industrial protectionism-type behavior, etc. It was obvious Geithner was not there to point fingers â€“ heâ€™s probably been given a strict script to which he must stick ... after seemingly losing his cool on Capitol Hill months ago.
But, ahead of Geithnerâ€™s upcoming trip to the UK and Germany, Reuters brought this quip to light:
"I'm completely certain that Europe has the ability to manage this," Geithner said.
So our US Treasury Secretary is completely certain that Europe has the ability to manage this. Just like they had the ability to manage a common currency? Just like they had the ability to manage individual fiscal positions within a monetary union?
Maybe they should ask the Estonians for help managing this. Or Maybe Giethner read this Financial Times editorial this morning, excerpt below:
Reaffirming sovereignsâ€™ responsibility for their sovereign mistakes would not weaken the eurozoneâ€™s political cohesion. It would strengthen it, by showing that monetary union is not a covert â€śtransfer unionâ€ť lacking popular legitimacy.
A new growth and stability pact must also be forged. Unlike the original, it must be enforced. Rule-breakers should have European Union funds withheld, and voting rights on eurozone matters suspended. But credible rules must ensure fiscal probity while recognising that fiscal rectitude is not all that matters. Deficits are more sustainable when debt is lower or growth faster, and at the bottom of a cycle. Crucially, growth is a precondition for stability, not something to be traded off against it. Putting countries on the rack of debt deflation will not stabilise their economies, only destabilise their politics.
So surplus states must bring something to the table. Deficit spending can crank a recovery into gear. Fiscal retrenchment must come with measures to expand private demand. In future Europeâ€™s growth rate must be raised through productivity gains. This is something neither fiscal nor monetary policy can do: only the hard structural reforms that Europe has so long ducked will succeed. Despite the angst over the euro, the greatest prize for Europe remains not the stability of its money but the dynamism of its real economy.
As I look over the charts today I see EURUSD is down about 150 pips ... again. And today most currencies are lower and risk aversion is thick.
[Chart not available in text format.]
It seems investors must have grown tired of listening to Geithner.
Probably as little as four months ago the US dollar would experience pretty steep declines whenever Mr. G opened his mouth. Today the US dollarâ€™s declines are few and far between. We expect it to stay that we for a while ... because weâ€™re not even close to completely certain that Europe has the ability to manage this. In fact, weâ€™re a lot closer to completely certain that they donâ€™t.
I may have mentioned this the next day, but about a month ago or so Jack was telling me he was reading the latest Elliot Wave long-term forecast. The main idea: we were very near the start of major leg down; not a correction, but the next big move of a larger bear market trend that would take out last yearâ€™s low.
Letâ€™s turn to the S&P 500 futures (daily) for a look at whatâ€™s happened since:
[Chart not available in text format.]
Now, I canâ€™t remember the exact date, but itâ€™s safe to say the call came right around that red circle, a.k.a. the top.
Any technicianâ€™s mom could recognize that weâ€™re now testing big-time support on this chart. That means we could see the selling take a pause sometime soon; or not. The thing is ... investorâ€™s nerves probably wonâ€™t be granted that same luxury because the global macro forces driving this move lower arenâ€™t going to be subsiding anytime soon.
And if this support level does represent a resting point for global asset markets, what might be the trigger for a fresh push lower when it comes?
Well, it could be a set-back to the economic indicators that have so far been rather decent. Because if this European-bred risk aversion eats away at investor and consumer sentiment, and thus the recovery in key economic indicators (lending, jobs, consumption, etc.), then thereâ€™s going to be very little to hold up these markets.
Place your bets. US dollars continue to look good at that point. Escape to America, anyone?
John Ross Crooks
Black Swan Capital
www.blackswantrading.com Have you heard about PositionTrader FX?
Weâ€™ve been getting the same question a lot over the last few days: is it too late to profit from the euro crash; and what about the Aussie ... or yen?
And our answer is:
Weâ€™ve done well in 2010. And we expect to do even better as the halfway point approaches.
For good measure, Iâ€™ve included our entire year-to-date track record and profit curve here, as of Thursday, May 20.
Hereâ€™s the bottom lineâ€¦
We think the Euro is going to par with the dollar â€“ 1:1 â€“ or maybe even lower.
If youâ€™ve been waiting on the sidelines, now is time to jump in.
If youâ€™re not sure how to implement a currency trading strategy, weâ€™ve got you covered. And we offer a 30-day 100% money-back guarantee if this isnâ€™t for you. After that we prorate your refund on a weekly basis if itâ€™s not working for you.
This is speculative trading and is not for everybody. If youâ€™re cut out for this, jump over now and give it a try.
All the best,
Director of Sales and Marketing
Black Swan Capital
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."