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Macroeconomic Analysis And Trading Ideas

Dow Jones to Gold Ratio - Major Trend Shift UnderwayLook for gold to perform similarly to how it behaved from 2009-2011. I believe a significant part of gold's bear market from 2011-2015 was due to the world placing trust in the Central Banks and believing the lie that the Central banks had saved the day. That trust is fading quickly, evidenced from gold's move from 1180 to 1700 in the last 15 months. When ZIRP and QE forever becomes a reality gold will already be past $2000/oz and will make up for the years of underperformance. This is not a pie in the sky prediction, this is real life. Every day the markets are getting closer and closer to fully pricing this reality in. Lets do a quick comparison. 2008 Crash: - dollar soared - stocks fell - gold fell, and less than stocks - gold stocks fell worse than US stocks - Emerging market stocks fell worse than US stocks 2020 Crash so far: - dollar falling - stocks falling - gold holding steady - gold stocks falling but more relative strength than US stocks - Emerging markets falling but more relative strength than US stocks What's different now? The dollar is getting ready for a big fall and the central bank balance sheets are getting ready to explode. 85 DXY wouldn't surprise me in 2020.
FX_IDC:XAUUSDLong
by Ludwig_Von_Mises
3
US Dollar Crisis - Alert!It looks like we're seeing the beginning of a new financial crisis. Don't be fooled, this historical collapse of the market isn't because oil prices, but because of simultaneous bubbles popping, starting with the stock market bubble, Federal Reserve Bubble, and debt bubble. If we take a look at the response from the government, its horrifying. They are taking steps that will inflate this bubble beyond comprehension. Based on what the government and the private Federal Bank have said we should soon see: Imminent Rate Cuts - Negative Rates High Possibility. $150 Billion QE Liquidity - As a start, which can easily double. Stimulus to private sector, small businesses, and even corporations. Pay-roll Tax Cuts - Even less income, higher debt and more printing. This is very bad. All of these steps will expand the Feds sheet massively, eclipsing what took place in 2008. This entire economy is based on this cheap money that has been pumped all over the world under during the last administration and Fed chair. This time, 0% interest rate and QE won't stop the bubble from popping. The Federal Reserve will resort the helicopter money, and in the end, the results are going to be a loss of confidence in fiat. You will soon see failures of fiat starting with the Euro, then by Yen, next will come the US Dollar. This bubble of debt including derivatives is somewhere passed $250 TRILLION. This stack of cards is coming down hard, and the more the central banks do, the bigger the problem is. In fact, the more involvement they have, the greater the collapse is. From here, the domino effect gets greater as consumer spending collapses, taking down housing, autos, and stock prices. This leads to closures, which leads to layoffs, which leads to high unemployment, which leads to welfare, which leads to more printing of money. So, where do we go from here? Safe havens. First and foremost gold and silver, as these will break out of central bank's manipulation hold. Next, for a quick profit taking, gold mining stocks see a massive rally (200-800%) during any economic, geopolitical, political issues, or elections. Check chart history on ASM, NGD, BTG and others to prove it. These stocks are massively undervalued in comparison to gold. Do I suggest Bitcoin? Absolutely not. From what we've seen today, along with numerous other selloffs, crypto has been falling WITH the stock market. From here, metals, and honestly, some prepping for inflation. Buy things now before hyper inflation kicks in. All of this money printing WILL show itself in inflation. Lastly, in a word of opinion.. this next crash will be the death of fiat. Central banks have been foaming at the mouth over digital money for a long time but infrastructure hasn't been there. The evidence is everywhere, as cash is disappearing. China is seeking to digitize their currency. Sweden is the most cashless nation on earth. P2P payment systems and companies are sprouting everywhere. The signs are there, if you care to look.
TVC:DXYShort
by WorldEconomics
What does a market reaction to the Fed's decision say?Since yesterday, by and large, was the first full day of working out the Fed’s emergency decision to lower the rate by 0.5%, today some results can be summed up. And they are generally disappointing for optimists. In theory, stock markets should have perked up and provoked a sharp increase in stock indices. But this did not happen, that is, there was growth, but not at the scale that could be expected. In theory, the pressure on the dollar should have intensified. But yesterday, the Dollar Index rose. In theory, the Fear Index was to drop significantly. But according to the results of yesterday, the decrease was insignificant. What are all these signals talking about? The magic of Central banks no longer works the way it used to. Lower rates no longer automatically resolve existing problems. And this is a very alarming signal for stock market buyers, gold sellers, and other optimists. It seems that the bubble is nevertheless broken and the air, despite all the efforts of its creators, is gradually coming out. In general, monetary policy has exhausted itself and this is an extremely alarming signal: if the situation worsens, it will not be possible to resolve the situation with the usual methods. The consequences of the coronavirus have not even begun to appear, and Nasdaq is quoted 10% below the maximum and, it seems, can no longer grow with the certainty with which it was literally a couple of weeks ago. So in everything that happens, we see the strongest confirmation of our basic investment ideas: sales on world stock markets, and especially on the US stock market; gold purchases and sales of risky assets (such as the Russian ruble). But back to the events of yesterday, which was very full of news. The Bank of Canada lowered the rate immediately by 0.5%. The Canadian dollar obediently worked this out, losing about 100 points paired with the dollar. But in general, the reaction was relatively calm at such a massive reduction in rates. US employment data from ADP turned out to be quite good: +183K with a forecast of +170K. What sets in a positive mood against the dollar ahead of Friday's official statistics. The ISM Index in the non-productive sphere also pleasantly surprised: 57.3 points with a forecast of 54.8 points. But the Eurozone indices traditionally fell short of expectations and for the most part, came out worse than forecasts. Well, the results of super-Tuesday played into the hands of the dollar, on which Biden won quite unexpectedly, who is considered a more adequate option from the Democrats as opposed to the “left” Sanders. In general, our desire to sell a pair of EURUSD intensified up to the recommendation to sell the pair from the current ones with the addition of any attempt to grow. Oil stocks in the United States have grown quite slightly, but all the attention of oil market participants has been riveted to the OPEC meeting and OPEC+ decisions. It is very likely that today some specific information will appear that could provoke strong movements in the oil market. If OPEC+ decides on additional reductions (ideally about 1 million b/d), oil has a chance of growth. The main stumbling block is Russia and its unwillingness to scale up the reduction.
by Trade24Fx
Fed`s surprise, coronavirus chronicles, ADP numbersThe main event of yesterday was the Fed’s decision to urgently reduce the rate by 0.5%. The central bank did not wait on March 18 and caught many by surprise. The reaction of the financial markets as a whole seemed logical: the US stock market went up, the dollar was falling, gold was growing. The whole question is whether these trends will continue. We practically do not doubt gold and put on its further growth. The US stock market may well grow by a further wave of optimism by a few percents. But the closer he gets closer to historical highs, the stronger will be our desire to sell. The dollar will be able to take revenge on Friday, but more on that below. In the meantime, we traditionally continue to review the news from epidemic fronts. The epidemic in China has virtually disappeared (130 new cases), but in the world, everything is in full swing (almost 2000 new cases per day). G7 countries, meanwhile, held an emergency meeting at which they firmly decided to confront the economic consequences of the epidemic. Inspired by this news, as well as information about a possible massive easing of monetary policies around the world (the Central Bank of Australia also lowered the rate yesterday and thereby confirmed reasonable expectations), investors again breathed a sigh of relief and rushed to buy cheaper assets. We traditionally do not share this optimism and consider it clearly premature. The consequences are just beginning to manifest. So in the next month, depressing news will be enough. On the foreign exchange market yesterday there was a certain return of common sense. In terms of the fact that the euro stopped growing at the end of the day (even against the background of information about the Fed’s rate reduction of 0.5%), the pound seemed to have found some ground under its feet. All the attention of traders is focused on the first rand of trade negotiations between the EU and the UK. The results will not be earlier than Thursday. So far, we generally consider all this to be nothing more than noise, which can only give the best entry points. Really, nothing will be solved now, which means you should not worry about anything. Recall that our position on the pound is medium-term purchases. Justification - The EU and the UK will eventually be able to agree again. As for the euro, it seems that there was a less clear explanation for its growth in recent days. In addition to the classic for almost any strong movement of triggering stop loss and buy-stop, analysts call the curtailment of the trade due to the coronavirus epidemic as the main reason for the sharp strengthening of the euro against the dollar. For those who are not in the know, we explain that the ultra-low rates in the Eurozone made it possible to borrow money there and invest them in markets with higher returns (for example, the USA). Which naturally led to a depreciation of the euro. Curtailment is marked by opposite trends, respectively, the euro strengthened. Rumors that the Fed will sharply reduce the rate in March and may reduce the rate even later in 2020 provoked the start of the process of curtailing the trade, which was especially clearly reflected in the EURUSD pair. News about the epidemic has recently monopolized the information space so much that it’s easy to miss important news that does not have the word coronavirus or something like that in the headline. We mean that on Friday statistics on the US labor market will be published. This news is traditionally one of the main ones for financial markets. Considering how sensitive markets are now to any deviations from the norm, these data are of increased importance. But the numbers on the NFP will be published only on Friday, but for now, today we are waiting for data from ADP.
Short
by Trade24Fx
China problems, Central Banks & euro riseThis week begins to give a first idea of ​​the economic consequences of the epidemic (so far in the context of China). We are talking about the manufacturing PMI index for China, which fell to 35.7 in February (compared to 50 in January). The non-manufacturing index came out even worse, showing a value of 29.6 (the lowest in history). Recall that any value below 50 indicates a decrease in economic activity. And this is only the first swallow. Then there will be new indicators, and each of them will plunge financial markets into an ever greater depression, at least for some time. Meanwhile, in China itself, the epidemic continues to decline rapidly. In Wuhan (the epicenter of the epidemic), they even began to close the first temporary hospitals due to the lack of patients. But the relay race in China is confidently intercepted by the world as a whole. South Korea, Italy, Iran - current epicenters, which are also not localized, but, on the contrary, spread the virus to other countries. If we draw an analogy with China, then at best for the next month we will find exclusively disappointing news. So you should not count on something good from March. Accordingly, the outcome from risky assets is likely to continue, respectively, gold and other safe-haven assets will find fundamental support. This week we will continue to use the bundle of buying gold - buying USDJPY as a promising medium-term position. In our opinion, the strengthening of the yen, if it continues, will be limited, but the opportunities for gold growth look much more extensive in this regard. Our disbelief in the significant strengthening of the yen is due to the fact that Japan is experiencing serious economic difficulties and traditionally one of the components of the equation to solve them was the devaluation of the yen, so the Bank of Japan is either around 107 or about 105, but most likely it will intervene and prevent the yen from strengthening. In general, central banks are again in the spotlight. Everyone expects salvation from them. As it was during the crisis of 2007-2009. So far, they live up to expectations, since all key central banks have noted rather aggressive statements about their readiness to act. Markets traditionally focus on the Fed. This is mainly due to the current difficulties of the dollar and the frank success of the EURUSD pair. With each new hundred growth points of EURUSD, our desire to sell a pair grows stronger, as does our desire to increase transaction volumes for sale. Part of the dollar’s problems lies in the plane of the presidential election. We try to minimize the analysis of the political plane, focusing on the economy. But today is the so-called Super Tuesday. The day when 1344 of the 1991 Democratic Party delegates cast their ballots for a particular candidate. So far, Sanders is the undisputed leader (probability of victory = 57%), but Biden still has chances (probability of victory = 31%). So the day for the US political sphere is very significant. The pound was under pressure yesterday due to the negotiation process between the UK and the EU on a trade agreement. There is already a familiar game of tug of war and trade for the best conditions, tied to mutual threats. As in the case of Brexit, we prefer to see not the current noise, but the perspective. And it is such that the parties are likely to agree in one form or another. Accordingly, the pound will receive its positive sooner or later. So in the medium term, we do not see any problems for medium-term purchases of the British pound. Rather, on the contrary, we see good shopping opportunities. In current conditions, sales of the EURGBP pair seem ideal to us.
Short
by Trade24Fx
2
S&P 500 versus GoldThe 1.5-year-old declining resistance line (magenta) has proven too strong for the 4 year rising support (blue) which was broken just last week due to the record drop in the US indices. The drop was due to a combination of a market that had been overzealous and priced to perfection in an increasingly deteriorating economic environment. The coronavirus certainly added fear to the markets as it is looking increasingly likely that the service sector globally is going to get hit pretty hard in the coming months. This break-down of a 5-year consolidation, especially with an initial fake breakdown and fake breakout attempt, appears to be hinting at gold outperformance over stocks over the next 12-24 months. The ratio needs to continue putting in lower highs and lower lows to validate the gold>SPX thesis. Central banks response to the carnage in stock markets is going to tell us a lot. How stocks and gold respond to the shift in monetary policy will also be extremely valuable data. I want to stress that with this SPX to Gold Ratio, SPX/XAUUSD ratio, is that we don't know if this pattern is going to break higher or break lower. Breaking higher into a hyper mania similar to 2000 Dotcom is still possible, the next few months will be telling us, but it's also possible we're near the limit that this current stock bubble can maintain. Rates and economic growth were a lot higher in the 90s which you could argue enabled/justified the massive overvaluation. And by many measures (not at all) the current markets are the most overstretched that they've ever been. For example value versus growth is the most skewed its ever been in favor of growth. Commodities are basing at 40-year lows. The gold mining sector versus their own product is the most undervalued it has ever been. If you think gold has the potential to rise 20%, 50%, 150% or more in the coming 1-5 years, then a position in both the metal and the mining sector is a no brainer. Utilizing funamdental and technical analysis we can find the best companies and make timely and strategic purchases over time. Your odds of making a profit are better when you buy something when it is cheaper than normal. Everyone's piling into what's done well for the past several years - that's classic momentum investing and can cost you dearly if we're near a significant top in US indices. I much prefer buying things when they're on fire sale. Be watching how central banks respond and how gold and spx respond to the central banks. This multi-year triangle consolidation is coming to an end and when these triangles breakout in a direction, it is not uncommon for it to be followed by extremely volatile moves in the direction of the breakout that can last for years.
TVC:SPXShort
by Ludwig_Von_Mises
2
Beating continues, what to do with euro, yen & poundYesterday was largely typical of the current week: investors continued exodus from risky assets and increased positions in safe-haven assets. Perhaps the main result of the day can be considered the return of the yen to the fold of safe-haven assets. Recall that last week, after the devastating data on Japan's GDP, there was talk that the yen could no longer be a full-fledged refuge. But, judging by its growth yesterday, it’s quite possible for itself. True, such a strong growth of the yen raises questions, but are its buyers too carried away? In the end, no one canceled the failed GDP data, as did the fact that the country was one step away from the recession. So today we are inclined to look for points for purchases of a pair of USDJPY. Meanwhile, a survey of European companies operating in China showed that 577 out of 577 respondents surveyed expect their performance to worsen due to the epidemic and the downtime of the Chinese economy. The results, although obvious, are no less indicative of this. The epidemic continues to expand around the world (the number of new cases in the world steadily exceeded the number of new cases of infection in China) and the point is not even the increase in the number of new cases, but the fact that an increasing number of countries are taking certain preventive measures, including restricting travel, school closures, etc. All this, ultimately, will lead to an increase in the scale of economic losses. Well, the list of companies that have publicly announced the deterioration of their financial results in the future has been replenished with such titans as Microsoft, Anheuser-Busch InBev, etc. Actually, as we predicted in our previous reviews. Investors, meanwhile, are urgently reviewing their expectations regarding the actions of the Central Banks. In particular, 90% of traders expect a Fed rate cut in April. So yesterday's dollar difficulties in the foreign exchange market are generally understandable. Nevertheless, the growth of the euro against the dollar seems very abnormal to us and we are inclined to sell a pair of EURUSD today in double, if not triple volumes. Recall that the Eurozone economy continues to experience serious difficulties, and this is still without the consequences of a coronavirus. The situation in Italy also does not contribute to the purchase of the euro. Therefore, we sell the euro against the dollar at full capacity. As for the general list of our positions for today, it is generally unchanged: we are looking for points for buying gold (but we are careful - we buy on the slopes with mandatory stops), we sell oil, we sell EURUSD, we buy GBPUSD. The only sales of USDJPY today we are replacing with the purchase of a pair with small stops.
by Trade24Fx
Macro Deep Dive - SPX, Initial Claims, Yield Curve and Fed FundsCharts: - Top left = SPX - Bottom left = Initial jobless claims (unemployment metric) - Top right = US 10 year and US 2 year spread (Yield curve inversion metric) - Bottom right = Fed funds rate (short-term interest rates) It is no secret that US equities are grossly overvalued, from Warren Buffet to Stanley Druckenmiller to Ray Dalio, the smart money has made their case for why US stocks simply cannot justify their valuations indefinitely. Yet Stocks continue higher, largely due to massive CB liquidity, spurred on from fears of a global slowdown and the ensuing economic impact this would have on such indebted nations and consumer, this coupled with the supply chain shock that the Corona-Virus is undoubtedly having on global trade is a recipe for disaster. So what are the macro/ recession indicators saying? They are flashing red. The Initial claims are at record lows, which sounds fantastic, until you realize that most major recessions and even depressions are accompanied with low, not high, unemployment. Recessions strike when everyone is complacent, when they are fat and happy and when they have their blinders on. I will be watching the initial claims and will look for the the claims to spike and reverse trend, as this is a much stronger indicator of structural weakness within the economy. Moving over the the US10y/ US02y spread, it is well known that the yield curve briefly inverted in 2019, however, the initial inversion is not the point to sell, this is due to the yield curve inversion being a leading indicator of recession. Historically, from the point of first inversion to the inevitable decline in equities, is roughly 12 months to 18 months. We are 7 months into the initial inversion and the yield curve looks like it is going to invert yet again. Finally we have the Fed funds rate, the targeted overnight lending rate for the Federal Reserve. The trend is clearly down, down, down with rates this has been rocket fuel for bonds which are now traded akin to equities for capital appreciation, rather than the interest bearing assets they were designed as. Furthermore, and perhaps most interestingly, it is not the point where rates are raised that signal trouble for stocks, but rather once the Fed pivots and reverses course and begins easing and lowering rates, THIS, not the rate hikes is the signal to watch for. It comes as no surprise then, that interest rate cuts have not only begun, but are in full swing, with further rate cuts this year, already being priced in. The macro outlook looks bleak, this bubble CANNOT last forever, however i firmly believe that the Banksters will not let this bubble burst without a fight, a global slowdown, coupled with global equity markets crashing would cause widespread panic and in some places, riots. So keep an eye out for the helicopter drop of money coupled with bail ins, bail outs and of course, more QE. -TradingEdge
TVC:US10Y
by Profit_Link
4
The yen could not stand it, investors relaxed againYesterday was the day of reckoning for the Japanese yen. We already wrote this week about the failure in the country's economy, but we perceived the lack of reaction of the foreign exchange market as the general inability of the yen to fall due to increased demand for safe-haven assets (see the dynamics of gold prices). As yesterday showed, we were wrong. The markets harbored a strong grudge against the yen, but they lacked reason. After another wave of optimism arose in connection with the improvement of the epidemiological situation and measures to stimulate the economy from China, the yen strongly recalled everything. How deservedly the Japanese currency has suffered is a moot point, but the fact remains that the yen lost a lot yesterday. Although, again, in terms of facts, then 2,000 deaths (+136 new) and 75,000 (+1872 new) cases of infection are no reason for optimism to grow. But the yen was sold, and US stock indexes updated another historic high. What is happening in the financial markets continues to be puzzling, because, looking at the dynamics of gold, there is a feeling that investors are worried about the coronavirus and its consequences, but an analysis of the yen and US stock index charts suggests that the epidemic is a definite plus for the world economies and a reason for purchases even in excess of overbought assets. Meanwhile, inflation in the UK, USA, and Canada was above forecasts. This, by and large, was to be expected: it is impossible to inflate markets with money without consequences for years - sooner or later the time of reckoning will come. It is likely that we have the first signals. Just in case, we note that central banks will be required to respond to rising inflation. They will do this by curtailing the operations of quantitative easing and other cash injections, for example, in the repo market, as well as by raising rates. Rising rates will provoke a chain reaction in the economy and lead to the collapse of bubbles. If 3 years ago, the Fed clearly hoped to gradually blow out a bubble in the US stock market, now it has clearly given up on this hand. That is, the explosion will be very loud. However, so far the markets do not care about this, but now they do not care. I do not care that Apple will fail the first quarter in financial results, that Adida’s economic activity in China has fallen by 85%, that the head of the IMF calls coronavirus the main threat to the global economy, as well as hundreds and thousands of other facts. Going against such a train is generally ungrateful. But to buy Nasdaq above 9700 with such a fundamental background, the hand categorically does not rise. Perhaps the only option to save the rest of common sense in trading and not to merge the deposit is intraday trading with hard stops. So today we will sell oil, USDJPY and EURUSD pairs, buy GBPUSD with small stops, and also look for opportunities for buying gold.
Short
by Trade24Fx
1
Accelerating Inflation is the Elephant in the Room Back in early October I posted a commodities chart. On that chart I shared my thesis that Gold's 6-year breakout in May would retest and commodities would follow on the next leg up. I later posted that "unofficial QE would add fuel into inflationary forces". With Gold breaking out of its healthy correction, inflation hitting 9-year highs, the Fed saying they will not raise rates until they see and significant and sustained increase in inflation and the fundamentals deteriorating, I see the potential for a huge surge in inflation in 2020 and 2021. Especially because its the trade that is most unhedged. Most investors are prepared for deflation - aka if stocks and real estate fall. Almost none are prepared for a rally in inflation, falling dollar, and surging commodities. Strong breakout in TIP with very strong volume. The TIP Bond ETF is a way to hedge yourself against rising inflation and as a way to visualize inflation sentiments in the market. Notice the 3 lows at support coincided with Gold's low in 2013, generational low in 2015, and then in late 2018 when the Fed was being very hawkish, talking about autopilot QT and 4 rate hikes in 2019. Additionally, the moving averages and volume are showing there's more room for growth. The more I look at the facts, rates of change, and the charts, the more I'm convinced the US dollar simply cannot maintain its current level. The Dollar has been flat at 96-97 in 2019, which is impressive given all that has happened. Fed promising to not raise rates until we see a significant and sustained rise in inflation. Federal debt is growing at an unsustainable rate. All-time high twin budget deficits. Additionally, the Fed did a massive U-turn and provided massive liquidity to the market in 2019 due to the 3 rate cuts and QE on emergency levels. Silent QE is growing faster than during official QE. The fiscal stimulus from record spending and tax cuts plus the massive monetary stimulus has helped push us to 9-year highs in rate of change for CPI inflation. Since Q4 2018, Gold has increased from 1180 to 1550 with a high correlation to the TIPS ETF and gold stocks have outperformed the S&P500. The inflation move has already started and few are seeing it, but most investors remain oblivious or unprepared for a significant and sustained increase in inflation. With the rate of change for inflation rising and the relevant fundamentals deteriorating and 2020 being an election year for Trump, this inflation or "reflation" trend that began in Q4 of 2018 looks to pick up speed in 2020. The Fed wants a cheaper dollar to satisfy the Repo market and Trump wants a cheaper dollar to "stimulate" the economy enough to get reelected. With these strong fundamental drivers and technical confirmations, look for the DXY to continue to build a downward trend as it heads to 93 and lower. Those that think central banks can do QE forever without creating inflation and devaluing the currency are wrong. Commodities have shown signs of life at times over the last few months - platinum, silver, copper, some agriculture. I just want to reiterate - with the fundamentals worsening and the rate of change for inflation increasing - in addition to a break out on the TIP chart, highly bullish breakouts in Gold, breakout in Feds balance sheet, and breakout in government spending- there's a good chance we can get big surges in inflation assets in 2020 and 2021. Things to watch out for: - Pay close attention to interest rates and the Fed. The better we can understand the Fed's intentions the better we can trade and invest accordingly. - The Fed has said they will not raise rates until they see significant and sustained inflation. Keep an eye on how fast inflation rises. If inflation surges and the Fed doesn't hike and potentially cuts, gold and commodities will fly. - The "market" needs debt expansion to keep itself sustained. Keeping rates flat and doing a certain amount of QE per month will eventually be insufficient to keep stocks and bonds propped up and rates suppressed. Over the next 6-12 months keep an eye on the Fed's operations, any changes or growth, and any liquidity crunches. The Fed may front-run any liquidity crunch by announcing an official QE program. This is bullish Gold. Watch what they do. If they are slow to act or become hawkish, they could deflate the bubble. - Watch the price action and trend shifts on the DXY.
AMEX:TIPLong
by Ludwig_Von_Mises
9
STRUCTURE UNCERTAINTY.OPTIMISTIC OUTLOOK.Massive structure formed on the weekly chart. I am full of optimism for Bitcoin and the crypto marketplace in general. So I am quite bullish and expect the green arrows to win so to speak, which means we might see 100k per Bitcoin some time in the future given the debasement of the currencies that is going on all around the world, with the central banks pumping liquidity into the system. Bitcoin can protect your savings from the artificial inflation. No to the big government. Yes to bitcoin. Guys, thanks for reading, be safe be good, I’ll talk to you later.
COINBASE:BTCUSDLong
by FxRage
5
Oil and world are in danger, a pound in anticipationTraditionally, we start the review with news about the coronavirus epidemic. Once again, we note that the matter is even on its scale - thousands of times more people die from ordinary flu, and hundreds of thousands of times more get sick each year. The point is the problems that this epidemic has on the global economy. A number of key industrial centers in China have been completely or partially idle for the third week. Each such day is further destruction of the global supply chain, and if there are still enough stocks in warehouses, then every day the risk of a shortage of materials to continue the activities of companies becomes higher, as well as the scale of losses. One of the main victims this week maybe oil. We wrote that last week OPEC+ was able to tentatively agree to reduce oil production by another 600K b/d. But yesterday information appeared that Russia could refuse this. And here, even in Libya, the warring parties are close to signing a peace treaty, which is fraught with the return of several hundred thousand barrels per day to the oil market. And all this is happening against the backdrop of a sharp drop in oil demand from China. Not surprisingly, some experts predict an oil drop of at least 10% in the foreseeable future. In general, oil sales this week remain our basic trading idea. Returning to the current figures on the scale of the epidemic, we note that the number of deaths is approaching 1,000, and the number of cases is close to 50,000. Once again, we recall that these are official statistics. The main mass of experts converges in opinion, that the figures are underestimated by several times to several tens of times. In connection with such a development of events, we cannot but recall our recommendation to sell the Russian ruble. The conditions for this are almost ideal, especially when you consider that the Central Bank of the Russian Federation lowered the rate again last week and plans to do this further in 2020. Today, in terms of macroeconomic statistics, it will be interesting primarily for the British pound. Data on GDP and industrial production can trigger a surge in volatility in pound pairs. Given that in recent days, the pound was already under strong downward pressure, weak data will almost certainly trigger a new wave of sales. But at the same time, good numbers can give a start for strengthening the pound - points for its purchases are very attractive. In general, today you can try news trading, with pending orders or enter after the news, playing back a fundamental positive or negative.
Long
by Trade24Fx
POV 4Y in a nutshell & what matters if you trade equity indicesThe following is just my point of view and not the single source of truth. Hence, I would appreciate any comment which would lead to a fruitful discussion. When you are trading equity indices, you are simply trading a bundle of cashflows (compromised by the companies within the index). If you are not a scalper (I am not) but rather a swing trader (what I try to do to finance my living/ family) you would do your analysis based on 4H, daily and weekly charts. But apart from that, the most important question is, is there any event, which affects the cashflows within the index. Then, is this effect temporary or permanent. Typical events which affects more or less all cashflows within an index: Interest rate (central banks) GDP (incl. e.g. unemployment rate...) Inflation (defines the price for goods, hence the cashflow) Costs (incl. e.g. workforce costs...) Solvency (i.e. of your customers and the solvency is driven by market liquidity and interest rates) Uncertainty (these are mainly political risks like war, trade war etc. but sometimes also natural disasters and usually temporary even if they last for 1-2 years) To better understand these cashflow drivers, lets take as an example - the DJ and lets walk through 4 years and a couple of events, which drove the ups/downs in the DJ (from my POV): When Mr. Trump won the election in 2016 he soon started to initiate a very important law, the corporate tax law . Which would reduce the corporate tax significantly, hence has a hugh positive impact on the cashflows. Today, companies profit significantly from the law and uses the profit to buyback own shares or just pay higher dividends. Many companies have chosen the first option, which has two effects: First, higher demand for the own shares (which usually increases prices) and secondly, every share which they buy increases the profit of the company since dividendes paid are paid to the company and increases the income of the company (cashflows from financial activities), which increases the value of the company. The market anticipated the new law and consequently increased the valuation of the companies, knowing (or betting) that the law would effect the cashflow positively and smooth out any overvaluation in the future. This explains why we saw such an increase in asset prices starting in July 2017 (6 months before the law would come into effect). This is why we have left the Obama-Trend Channel moved to the Corporate-Tax-Cut-Trend-Channel . Then two things happend at the same time , which was not anticipated by the market: Trump started a trade war with China in Feb. 2018 and the FED announced, that it would start the process of balance sheet normalization , hence reduce the liquidity in the market. Both have negative effect on corporate cashflows. At that time, nobody knew how much liquidity would be reduced by the FED, how many rate hikes we would see and how long the trade war would last and would the consequences would be. After 4 rate hikes and further escalation of the trade war, everyone in the markets was nuts. Apart from the fact, that sentiments were in panic modus due to uncertainty , you could not see such negative effects in the cashflow of the "healthy" companies, but companies with a lot of debt were in panic modus, because money became more and more expensive (keep in mind, we have a lot of zombie companies, i.e. negative cashflows. These companies hope to pay back the corporate debt with own share (actually they sell these share to us) or some of them really believe, they will become profitable in the future). On the peak of this panic modus Mr. Mnuchin organized a call with the CEO of the 6 major US banks . The day after, they started to buy like crazy (here I have to guess: probably Mr. Mnuchin told them, that the gov would increase the pressure on the FED to lower interest rates and that before the next election Mr. Trump would find a solution (interim solution) regarding the trade war.) During this 12 months many traders made a fortune or maybe have lost a lot, this mainly to uncertainty. So never underestimate uncertainty and try to keep calm. When the FED announced the end of the balance sheet normalization and induced afterwards USD 400 billion into the markets again, the current rally started, which was just shortly stopped by the coronavirus. In my opinion, the market (nobody want to say that) hopes, that Mr. Trump will be re-elected and that he is going to do even more tax cuts, this time for the middle class in order to boost demand, this would again lead us to a new trend channel: The "Corporate Tax Cut and Middle Class Tax Cut" trend channel. If he does not win the election, we would have again some uncertainty in the market. I focus on these above mentioned "cashflow drivers", but I do not care so much on all the little indicators (these may change sometimes daily/weekly. Nevertheless I have build a heat map, showing me, when to many indicators are declining). But I use also the technical analysis, especially to define when to enter a trade and when to exit a trade. And I am not always right, just recently I posted a trade (S&P) which proved how wrong someone can be (in this case I had underestimated the PBOC and the ECB). I hope you like my thoughts, if you disagree, just leave a comment and let's share our thoughts.
OANDA:US30USDEducation
by Chimbarosa
Week results - between Brexit the NFPThe main event of the previous week was not a meeting of the Bank of England or even a decision of the Fed (both the Central Banks left monetary policy parameters unchanged). This is not data on US GDP (annual growth rates have been the weakest since 2016: 2.3% in 2019 compared to 2.9% in 2018), but the coronavirus epidemic in China. Yes, so far the epidemic has been localized in China. But this is not easier. The magnitude of the coronavirus epidemic has already exceeded the 2003 SARS. And the World Health Organization declared the outbreak of coronavirus a global emergency. So last week, the markets were busy on the one hand counting the victims of the epidemic (more than 300 deaths and more than 15,000 cases), and on the other hand, counting the economic damage. China extended the New Year weekend for another week. That is, another week 2/3 of the Chinese economy will be closed. The magnitude of the losses is not yet clear, as the epidemic continues, but it is already clear that we are talking about tens of billions of dollars. The chances of China's GDP growth rate dropping below 6% now seem almost 100%. So the fears and concerns of the global recession have intensified. The Chinese stock market today is trading in a deep minus (about -8%) despite all the efforts of the Government and the Central Bank. Despite such a regrettable situation, trading is an opportunity that can and should be taken advantage of. For the long-term, it is worth selling in super bought stock markets, but in the medium-term and locally, the purchase of safe-haven assets (gold and the Japanese yen) and the sale of risky assets such as the Russian ruble look great. Actually, we voiced this plan last week, but as the epidemic grows, the relevance of our positions only grows. Another significant event of the past week was Brexit. On January 31, Great Britain officially left the EU. We already wrote that buying pounds remains one of the best trading opportunities at FOREX in terms of potential in 2020. Whether it is implemented or not will show the progress of trade negotiations between the UK and the EU. But if successful, a pound above 1.40 could very well become a reality. The upcoming week will be saturated with various kinds of macroeconomic statistics. But the main attention will still be focused on Friday statistics on the US labor market and NFP figures. Our thoughts and forecasts on this subject will be described closer to Friday. In the meantime, we continue to monitor the development of the epidemic and investor sentiment.
FOREXCOM:XAUUSDLong
by Trade24Fx
2
The epidemic continues, Carney's last word, Brexit dayAs we warned in our two previous reviews, investors relaxed clearly prematurely. Actually, the dynamics of underlying assets on Wednesday confirmed this. And the front pages of publications clearly indicate what investors should think and worry about now - the coronavirus epidemic. Yesterday we wrote that its scale has already exceeded SARS, and the epidemic is still in full swing. The number of deaths has already approached two hundred, and the number of cases is clearly aimed at overcoming the 10,000 mark. Meanwhile, analysts are accelerating the theme of global recession and coronavirus as a trigger. We already wrote earlier that there are prerequisites for this and current events are really great for the role of a catalyst. In general, our recommendations on buying safe-haven assets are still working and their decline on Tuesday was only a great opportunity for cheaper purchases. But back to the events of yesterday. The Bank of England left the bet unchanged. Since the price of the pound at the start of the day partially took into account a possible decrease in the rate, its increase upon the announcement of the decision by the Central Bank was an attempt to exclude this component from the price equation. Actually, our recommendation to buy the pound worked at 100%. For the current head of the Bank of England, Mark Carney, this was the last meeting. Already in March, he will be replaced by Andrew Bailey, who previously served as Executive Director of the British Financial Supervisory Authority. Well, do not forget that today is Brexit day. On January 31, 2020, Great Britain leaves the European Union. Note that Brexit was and remains the main driver of pound movements. Moreover, it is precisely the “soft” scenario that is being implemented. Recall that when the markets were just thinking about the possibility of a “soft” Brexit, the pound was worth 1.41-1.43. From this position, its current prices look like great opportunities for medium-term purchases with very ambitious goals. The US GDP for the fourth quarter was 2.1%. Overall expected as it was the final reading.
Long
by Trade24Fx
12
Markets calm too soon. Preparing for Fed's decisionDespite the fact that the coronavirus epidemic is in full swing (the number of deaths has already exceeded one hundred, and the number of infected has approached 5000), investors sighed with relief. The Fear Index (VIX) crashed 15%, safe-haven assets were down, and stock markets and oil were up. Since we still do not see reasons for optimism, our recommendations remain valid: we are looking for points for buying gold and the Japanese yen within a day, and we are selling the Russian ruble and stock markets in the medium term. As an argument, we will cite information from the head of the Medical School of the University of Hong Kong, Professor Gabriel Lung, who announced the data from which it follows that 10 times more people are infected with the coronavirus than is officially considered. According to him, in Wuhan alone, 25,000 people are infected with the coronavirus, and the total number is 44,000. He predicts that the number of coronaviruses infected in China will double in 6 days. If the markets decide to respond to this information, then we may well become witnesses of what happened on Monday. The only recommendation is that we recommend buying oil as a kind of hedge for other positions that are somewhat unidirectional regarding investor sentiment, as well as an independent, not hopeless position. Now everyone is fixated on one component of the oil market situation - demand. But there is still a suggestion. And in this regard, Libya sends a rather strong bullish signal to the market. We are talking about the possibility of an almost complete stoppage of oil production in the country. According to the head of National Oil Corp. Mustafa Sanalla in the near future production may be reduced to 72 thousand b/d. from the current 262 thousand barrels per day. Meanwhile, the main central bank of the world today will announce its decision on the parameters of monetary policy. With a probability of 87%, the bet will be left unchanged. At the same time, 13% of traders believe that the rate will be increased. Quite symptomatic is the fact that markets do not even consider the possibility of reducing the Fed rate. But unlike the ECB or the Bank of Japan, the Fed still has enough space for this to maneuver. So, they will almost certainly not touch the bid. So, all attention will be focused on the comments of the Fed. What are the plans of the Central Bank for 2020? How long will the money market continue to pump liquidity through repos? Answers to these and other questions can determine the configuration in the financial markets. Today we will not make plans and predict the reaction of the dollar to the outcome of the FOMC meeting. Our plan for working with this currency for today is to stay out of the market, study the position of the Fed and tomorrow will formulate a plan of work with the US dollar.
FX:USOILLong
by Trade24Fx
Central Banks weekly results, Coronavirus, Fed & BoELast week was marked by meetings of the Bank of Japan, Bank of Canada and the ECB. The first wave of decisions showed that the central banks are not yet ready for any changes in monetary policy. You can understand them: at the current rate of economic growth, raising the rate is impractical, and there is nowhere to lower it (at least in the case of the Bank of Japan and the ECB). ECB expected to detail the new monetary strategy but did not get it. According to the head of the Central Bank Lagarde, before November December 2020, it will not be. This week will be the second wave of meetings of the Central Banks. The Fed will announce its decisions on Wednesday and the Bank of England on Thursday. With the Fed, the intrigue is minimal, but there are doubts about the Bank of England - a number of analysts predict a rate cut. But we will talk about this closer to Thursday. The main global event of the past week was the coronavirus epidemic in China. The situation looks quite menacing. About 40 million people are limited in mobility. The tourist season is disrupted (all this happens at the height of the celebration of the Lunar New Year). Economists are only just beginning to calculate possible losses, but it is already clear that the damage will be very significant. But events are still only at the progress stage. It is very likely that this week will also be marked by growing fears in the investor environment in connection with the epidemic. We cannot but note that risky assets (primarily stock markets) are potentially under attack. But safe-haven assets, on the contrary, have good chances for growth. So this week we are again buying gold and the Japanese yen. In addition, we will continue to sell the Russian ruble: the formation of a new government, a hasty and generally dubious constitutional reform, the outcome of risky assets - all these are good reasons for the correction of the ruble. On Friday, January 31, Great Britain officially leaves the European Union. This is an occasion to recall the pound and its purchases. Recall, when the markets were just beginning to believe in the “soft” Brexit, the pound grew to the area of 1.41-1.43. Now it is becoming a reality, but the pound is quoted at about 1.31. Which in itself is a reason to think about buying it.
FOREXCOM:XAUUSDLong
by Trade24Fx
ECB strategy, record pessimism amid record greedYesterday, the ECB expectedly left the parameters of monetary policy in the Eurozone. This was predictable, so most were interested in the new strategy of the Central Bank. But Lagarde greatly disappointed the markets, saying that before November-December, one could not count on any clarity in this matter. Thus, the euro will not have to rely on support from the ECB in the foreseeable future. So the decline in the single European currency was quite natural yesterday. Not even Lagarde’s remarks on the fact that moderate growth was observed in the European economy did not help. In general, the euro continues to look attractive enough for sale. Increase pressure on the euro and sales in the EURJPY pair, which we recommended selling the pair when it was quoted above 122. PricewaterhouseCoopers recently announced the results of a survey of heads of major world companies. We have already analyzed the results of a similar survey from Deloitte and note that PWC confirmed the previous results: the business is experiencing record pessimism since 2009. Only 27% of company heads expect improvement in the economy. Most expect a slowdown in the global economy. Characteristically, the most pessimistic leaders in the United States. Which once again convinces us of the correct course on sales in the US stock market. Meanwhile, the fall of the Chinese Shanghai Composite Index by 2.8% on the last trading day before the lunar New Year, was the largest drop in eight months. Naturally, with such a level of pessimism, purchases of safe-haven assets look great. So today we will continue to look for points for buying gold and the Japanese yen. Again, the epidemic in China is in the process of development: the second large city, Huanggang (population about 11 million people), has been closed for entry and exit. Railroad interrupted with the city of Ezhou. Friday promises to be a rather volatile day. Data on business activity indexes for the Eurozone and selected European countries, as well as the UK and the USA, coupled with statistics on retail sales in Canada, practically guarantee that it will not be boring.
Short
by Trade24Fx
Central Banks week and the IMF head expects a crisisMonday turned out to be a fairly calm day for financial markets. The reason on the surface is a day off in the USA. So today it will almost certainly be more volatile and interesting. The Bank of Japan set the pace to the news background early in the morning. Monetary policy parameters were left unchanged. The press conference will be somewhat later than the publication of this review, so if any interesting details come up, they will talk about them tomorrow. Today will be interesting statistics on the UK labor market. Considering how disastrous the data on the British economy last week was, one should not expect any positive. Nevertheless, we continue to believe that Brexit is the main driver of the pound, and statistics in the current reality can lead only to local movements. Accordingly, weak data, of course, will provoke sales but are unlikely to lead to the formation of a trend. This means that purchases in intraday oversold areas remain relevant to us. Let's get back to the events of yesterday. Perhaps the most significant was the opening of the oil market with a gap up. The reason is concerns about the supply on the market. The fact is that Iraq and Libya drastically reduced oil production. In Iraq, because of protests, in Libya, because of armed groups that blocked the pipeline. And although it is very likely that these force majeure are temporary, we recall our recommendation to buy oil, which continues to be relevant in the current conditions. We also continue to be supporters of the impending crisis, or at least the strongest correction in the US stock market. So it was nice to note the replenishment in our ranks. The head of the IMF, Kristalina Georgieva, in her last interview, compared the current situation to what was happening in the world on the eve of the Great Depression. A key common feature of the 1920s and the present situation is excessive financial squandering. According to the head of the IMF, depression cannot be avoided. The whole question is only in time. In this regard, we recall our recommendations on buying safe haven assets (gold in the first place and Japanese yen in the second), as well as the “trading idea of the decade” - in the sale of shares of high-tech companies in the US stock market.
Short
by Trade24Fx
The week results: many events but few changesThe previous week was rich in important events, some of which can be formally classified as “game changers”, but judging by the dynamics of prices in the financial markets, the game did not undergo any special changes. Let's start with the most global. The United States and China signed documents on the first part of the trade deal. But there was no euphoria - almost immediately it became clear that this was really only the first step towards solving the problem. Hundreds of billions of dollars in tariffs remain in force, and harm to the global economy will continue to be done. China's GDP growth rate in the fourth quarter of 2019 was minimal over the past 30 years, which is the best illustration of the previous phrase. Other macroeconomic statistics released last week clearly confirmed this. The UK was the most disastrous data: GDP, industrial production, retail sales - all in the red and much worse than forecasts. Statistics from the US and the Eurozone also did not shine: industrial production in the States and the Eurozone came out in the negative zone. In general, against the backdrop of such statistics, we were once again surprised at new historical highs in the US stock market and became even stronger in our belief in its imminent decline. Madness cannot last forever. We already wrote about Putin’s initiatives and Medvedev’s resignation in Russia. We only note that the sale of the Russian ruble after the sale of shares in the US stock market and gold purchases, in our opinion, is one of the most promising positions in the financial markets as a whole. Speaking of gold. After the gold sellers could not get anything out of the signing of the agreement between the USA and China, we became even more fond of buying this asset both within the day and in the medium term, especially after gold returned above 1550. The Japanese yen, although it looks weakened, also It is a good alternative to gold, but in the foreign exchange market. Speaking about the upcoming week, we note that it promises to be even more interesting. It can be called the "Central Banks Week". The Bank of Japan, Bank of Canada and the ECB will announce their decisions on monetary policy parameters in their countries. And although experts do not expect global changes, given the weak form of the global economy, one can count on fairly “pigeon” sentiments in the ranks of the Central Banks.
Short
by Trade24Fx
Top Perfoming Save Haven CommodityAll comments and likes are very appreciated. _________________________________________________________________________________________________________________ The price of gold could hit a record high of $2,000 an ounce within the next two years as US economic growth fades and the Federal Reserve cuts interest rates, according to analysts at Citigroup. We can track a big bullish cycle in gold. Since the beginning of the year we can observe that XAUUSD possibly entered into a final wave V of 5 waves bullish cycle. The New York-based bank said in a Monday research note that the precious metal could top levels last seen eight years ago, when gold surged to $1,900 an ounce, as uncertainty over the 2020 presidential election combines with a sputtering domestic economy. Investors around the world have been drawn to gold at a time of negative bond yields, which have increased the appeal of yieldless assets such as gold. Around $15.3tn of bonds are trading at levels that guarantee buyers a loss, if the bonds are held to maturity. The gold price has risen by 2.5 per cent since 1st of January to trade at $1,558 a troy ounce, Citi said a combination of lower rates, growing risks of a global downturn, and strong demand among central banks could push prices higher still. Big foreign-exchange holders such as China, which has $3.1tn in reserves, have been keen to diversify their portfolios to limit exposure to the US dollar. China’s central bank has bought $4.8bn worth of gold over the past year 2019. _________________________________________________________________________________________________________________ All comments and likes are very appreciated. Best Regards, I0_USD_of_Warren_Buffet
FOREXCOM:XAUUSDLong
by I0_USD_of_Warren_Buffett
1
US stock market: growth out of control The Dow Jones Index is showing the longest period of growth in its history. Given that this growth is completely divorced from economic development, even the most avid bulls in the US stock market are beginning to doubt about prospects: the growth is clearly out of control. There is another fact: when the market grows very rapidly in a very short period, it becomes extremely vulnerable to correction. According to many analysts, a correction in the US stock market is inevitable and its minimum scale is 10% -20%. Jack Ablin, chief investment officer at Cresset Capital, expects a 15% correction in early 2020. The problem of the US stock market in terms of continuing the bull rally is the lack of drivers for such growth: the economic growth rate has long lagged behind the stock market growth rate, on the eve of the Presidential election, there are no serious economic reforms to be expected, companies are stopping their share buyback programs, and their financial results for the fourth quarter in a row show worse growth rates. Perhaps the only chance for stock market growth is an active interest rate cut by the Fed. But the Central Bank made it quite clear that it is not going do that. Recall, we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it is going to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times, the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
NASDAQ:NDAQShort
by Trade24Fx
Christmas Trading, Fed & Aussie BreakthroughThe pound had dropped below 1.30 earlier in the week. AUDUSD gained a foothold above the resistance level of 0.6900. If this breakdown turns out to be stable, then a wide space opens up for the AUDUSD for further growth to at least 0.7020 or even 0.7200. Since AUDUSD is above 0.6900, its purchases seem to us profitable. But in any case, remember the Australian dollar refers to commodity currencies, which means it is extremely sensitive to news from the fields of trade wars. Further de-escalation of the conflict will contribute to the implementation of the scenario described above. But the slightest fears about the negotiations between the USA and China can negate yesterday’s breakdown. In addition to the Australian dollar, what is happening on the foreign exchange market is worth noting except the inability of the pound to go below 1.2920, which can be taken as a signal that a panic wave has subsided. In this case, upon the return of the GBPUSD above 1.30, we recommend its purchases. Today we’ll talk about the monetary policy of the Fed and a rake the Fed stepped on. The Trump invades not only the politics and economy of the United States but also intervenes in the activities of an independent body, the Central Bank. Yes, the direct threats and calls of Trump are ignored by the Fed, but there are indirect points (for example, the consequences of trade wars) that the Central Bank cannot ignore. So the Fed’s attempt to normalize monetary policy and smoothly blow out the price bubbles that have formed in the stock market, corporate lending market and the debt market, faced with the consequences of the trade wars unleashed by Trump. And in 2019, instead of the planned increase in the rate by 0.50% -0.75%, the Fed cuts the rate three times. Thus, provoking further inflation of bubbles. So, the consequences will be more disastrous. The World Bank predicts China the role of the epicentre of a new global crisis. So we may well face a new Asian crisis, but unlike 1998, the matter will not be limited to a slight fright and default of a single Russia.
by Trade24Fx
2