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Tuesday, November 29, 2022

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Will We Hold It Wednesday – Euro $1.25 Edition

FXE WEEKLYWould you pay $1.25 for a Euro?

Would you take $125,000 of your Dollars and convert them to 100,000 Euros and put them in your safe until Christmas?  The Euro topped out (non-spike) at $1.45 in April (when the markets topped out) and then plunged to $1.31 (10%) before bouncing back to $1.41 (66% retrace) and then fell all the way back to $1.27 (10%) came back to $1.34 (66% retrace) and then down to $1.21 (10%) and is now back at $1.25 (33% retrace).  

Fibonacci would be very proud to see his numbers still ruling the markets 800 years later but it certainly doesn't make us feel warm and fuzzy about the Euro's chances of getting back to $1.30, since $1.29 would be that 66% retrace before we'd expect a drop back to $1.06.

From the point of view of our 5% Rule, we've got a 25-point drop from $1.45 to $1.20 and our "weak bounce" is a 20% retrace to – $1.25 and $1.30 would be a "strong bounce" 40% retrace but a failure here would be a very bad sign and, as you can see from Dave Fry's chart, the 22 week moving average crashing down to $1.25.57 doesn't make it seem all that likely.   

In fact, $1.256 was our shorting spot for the Euro yesterday and there easy money to be made there several times already.  We don't usually bother with currency trades but that one seemed pretty obvious…  This morning obvious Futures trade I highlighted for our Members in an earlier note was going long on gasoline (/RB) off the $2.90 line as we head into oil inventories tomorrow and the hurricane makes landfall and knocks out a couple of refineries (they don't have to be damaged, someone always at least "trips" on the plug and shuts them down for 2 or 3 days to jack up gas prices – especially ahead of holiday weekends).  

Gasoline makes a nice, bullish offset to our generally bearish bets – including oil shorts, because we still have way too much of it – despite 4 consecutive weeks of heavy draws, which were caused by a drastic reduction in imports and a drastic increase in imports to fake the impression of US demand over the summer.  

How much of a reduction?  Thanks to the manipulation of our nation's strategic resources for profit by the Banksters, net imports of crude fell from 8.8Mbd this time last year to 7.6Mbd last week.  Shorting America by 1.2Mbd is 8.4Mb per week and EVEN WITH THIS BLOCKADE OF IMPORTS, the net draw on US stocks was just 3Mb last week.  

Before it was mysteriously redacted, World News had a great article titled "Forget LIBOR-GATE: Oil Market Manipulation Is Far Worse" which gave a nice overview of the manipulation that is perpetrated by Investment Banksters, who leverage their QE money to jack oil prices up as much as $35 a barrel (with $60 being a "fair price" – and XOM's CEO testified as much on Capitol Hill) by manipulating both the supply of and demand for crude and crude products.  I wrote a similar article back November, 2009 titled "Goldman's Global Oil Scam Passes the 50 Madoff Mark" but it didn't change anything – in fact, oil prices now are $10 higher than they were then, costing global consumers yet another $328bn a year for the barrels alone and another $328Bn as the pass-through costs and mark-ups flow through the supply chain (gasoline was only $2.06 when oil was $85 a gallon in 2009, now oil is $95 and we're long on gas at $2.90 – at least we KNOW we're being screwed and can bet on it!).    

What we need, according to Chris Christie is to "fundamentally reduce the size of our Government" – get them out of the way so Wall Street can control your life and steal your wages without being annoyed by the occasional, toothless Congressional inquiry.  It was touching to hear that Gov Christie's father put himself through college on the GI Bill – too bad that's one of the many programs on the chopping block under the Romney/Ryan budget

In other proud GOP moments, Pennsylvania Senator Rick Santorum proclaimed it the party of life, hailing the platform's pledge to ban abortion with no exceptions, even for the health of the mother, incest or rape (what Paul Ryan calls the "method of conception"). Tea Party zealots celebrated the harsh immigration stance premised on hunting down 11 million undocumented workers until they "self-deport."

The conventioneers reacted well to the "hard truths" that Christie said Romney would be handing out, including $900Bn in ADDITIONAL tax breaks for the top 2% (people earning over $250,000 a year).  If there was ever an incentive in this country to up your tax bracket – this is the best on yet – maybe Romney is on to something!

A 20% tax cut across the board above the extended Bush taxes, will hand millionaires an average $175,000 a year tax break. Corporations will get not only a cut in tax rates, but a "territorial corporate tax" system that exempts companies from U.S. taxes for anything reported as earned abroad, giving multinationals a million dollar incentive to transfer jobs and report profits abroad. They'll abolish the estate tax that applies only to multi-million dollar estates of the top 1%. And they vow to defend the favorite loophole of the wealthy: the 15% tax rate on capital gains and dividends and on "carried interest" (the obscene tax dodge that enables Bain partners and other private equity guys to treat their fees as capital gains rather than income).

Romney and Ryan also pledge to cut government spending dramatically, but won't say what they will cut. They do promise to lard even more on the Pentagon, already burning through more money than it did at the height of the Cold War in comparable dollars. And they put off cuts in Social Security and Medicare for a decade, because they don't want to disturb today's seniors who vote in large numbers. The cuts thus must come almost entirely from the 15% of the budget that pays for the domestic services of government — everything from education to FEMA, the agency Republican Governors are calling on to assist in response to Hurricane Isaac.  As Bob Borosage, of the Institute for America's Future, so aptly puts it:  

Behind the multi-million dollar stage in Tampa, beneath the glittery "reintroduction" of Mitt Romney as a pragmatic business guy, lies this "hard truth." With the US suffering Gilded Age levels of inequality, Romney will fight for more tax cuts for the very wealthy and the corporations. And with record numbers in poverty, Mitt's promise is to savage vital programs for the vulnerable. Forget about the Tea Party's ersatz anti Wall Street populism or the Christian Coalition's war on women. This is the candidate and the party of privilege, intent on lavishing more benefits on the few while savaging the already inadequate support for the poor and the vulnerable. That's the "hard truth" Chris Christie didn't bother to mention.

Get rich quick – you don't want to be a poor person in America if these people take over!  

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kogen – because those puts can burn you on a massive move, then I would tend to go down and OTM.  So, with Amazon we are in the 220/230 Sept/Oct.  I tend to use weeklies to cover a stock that looks as if it has topped….and only do small covers.  They are too hard to gauge.

Phil—have you looked at BPT? It has been crushed lately and I am wondering if it now has become attractive?

Phil
I listened to Ann Romney, excuese my no sympathy, Rice started my WHAT! Ryan I had to lay down. My cats got mad growling, hissing at each other and I am telling the gosple total quiet in less than 60 sec. after he stopped. You did the listen to what you object to, excellent, I didn't make it.

Phil/AMZN  –  Here's some "food for thought" from Steve Rosenman on SA reg Amazon…Despite their high PE and low earnings, Rosenman says the following…
"Why are investors bidding up the stock? Because Amazon's total addressable market is seemingly endless. If you can buy a toilet at Amazon, they can sell you anything. Every year, Amazon adds more product lines to its web site.
The Next Big Market
There is a giant market on-line shopping hasn't touched yet – services. I wouldn't be surprised if some day you'll be able to purchase plumbing or electrical services on Amazon. Consider buying services from accountants, lawyers, doctors, handymen, or babysitters through Amazon. In a few years, I might be contracting to have my next toilet installed by a plumber through Amazon. Selling services on the web wouldn't be that hard to do. Providers could advertise at set rates with Amazon taking a cut. Maybe a quality guarantee and certainly a ratings system. Amazon would upend the service industry."

Olaf Palme:  It is reported in Europe that the Tetra Pak heir's wife, recently deceased, had information on a computer regarding Palme's unsolved, assasination, apparently a business interest concerned that his re-election would harm his business.  Fairly bizarre.

The Spanish price index rose 2.7% in Augurst, primarily a product of oil prices, it was reported.  And the falling Euro, I would add.  The Euro's @ 13% drop in the last year must be depressing consumption beyond what austerity measures, which includes a liberal dose of layoffs, have done.  There are additional budget cuts on the horizon.  Inflation was reported at 2.2% YOY in July, so it sounds like the rate is accelerating, consistent with the Euro drop.  The inflation/deflation arguments brought forward yesterday were somewhat arcane, it being put forth that rock-bottom rates in the U.S. that are held down artificially by money-printing could actually have a deflationary effect in the U.S  so perhaps there could be an assymetrical result between Europe and the U.S., which I wouldn't have thought possible.  

Ah, I see Phil has already marked Spanish inflation in red!!!

I don't know how this got on Fox News, but apparently someone there dropped the ball and let this on their website:
 
Paul Ryan’s speech in 3 words

2. Deceiving
On the other hand, to anyone paying the slightest bit of attention to facts, Ryan’s speech was an apparent attempt to set the world record for the greatest number of blatant lies and misrepresentations slipped into a single political speech. On this measure, while it was  Romney who ran the Olympics, Ryan earned the gold.
The good news is that the Romney-Ryan campaign has likely created dozens of new jobs among the legions of additional fact checkers that media outlets are rushing to hire to sift through the mountain of cow dung that flowed from Ryan’s mouth. Said fact checkers have already condemned certain arguments that Ryan still irresponsibly repeated.

Read more: http://www.foxnews.com/opinion/2012/08/30/paul-ryans-speech-in-three-words/?fb_action_ids=10151058561393892&fb_action_types=og.likes&fb_source=other_multiline&action_object_map=%7B%2210151058561393892%22%3A430876850304107%7D&action_type_map=%7B%2210151058561393892%22%3A%22og.likes%22%7D&action_ref_map=%5B%5D#ixzz251uJU5nw

If I took something away from the inflation/deflation/law of unintended consequences articles yesterday, it was that all the fiscal manipulation we are seeing destroys the value of pricing signals, leaving central banks and governments entirely in the dark in respect of what policies to pursue.  I don't think the fundamental laws of economics have changed [people react to savings/consumption/investment signals in the same old way] but the multi-variate problems of a globalized economy, with vastly different income, savings  and consumption levels, and the feedback effect of each economy on the others, is simply too complex for policy makers to address on a country by country basis.
 
 And, on a global basis, the model is competition, not cooperation [China hides all data at all times, for example], which, in the event, is proving a recipe for chaos.  Chaos creates fear, fear postpones investment, hiring and spending decisions, and in the end we're all wandering around the woods looking for acorns to eat.  A rather grim picture right now.  
 
I notice that prognosticators are predicting great things for 2014, demonstrating that the farther out an event, the more precisely it can be safely predicted, since no one will remember idiot ideas of the distant past.

Revtodd:  Fox / Amazing:  Has there been a hostile takeover?

Phil, So yesterday Good News was NO news, you say we need a new model for the economy and I agree but what about new models for trading against the machines.  It's like HAL in 2001 Space Odyssey….
Dave Bowman: Hello, HAL. Do you read me, HAL?
HAL: Affirmative, Dave. I read you.
Dave Bowman: Open the pod bay doors, HAL.
HAL: I'm sorry, Dave. I'm afraid I can't do that.
Dave Bowman: What's the problem?
HAL: I think you know what the problem is just as well as I do.
Dave Bowman: What are you talking about, HAL?
HAL: This mission is too important for me to allow you to jeopardize it.
Dave Bowman: I don't know what you're talking about, HAL.
HAL: I know that you and Frank were planning to disconnect me, and I'm afraid that's something I cannot allow to happen.
Dave Bowman: [feigning ignorance] Where the hell did you get that idea, HAL?
HAL: Dave, although you took very thorough precautions in the pod against my hearing you, I could see your lips move.
Dave Bowman: Alright, HAL. I'll go in through the emergency airlock.
HAL: Without your space helmet, Dave? You're going to find that rather difficult.
Dave Bowman: HAL, I won't argue with you anymore! Open the doors!
HAL: Dave, this conversation can serve no purpose anymore. Goodbye.

Lead-in paragraph of guest column by [convicted fraudster] Conrad Black in the FT: 
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our

"It is an abiding mystery why the US, after leading the west to the greatest strategic victory in the history of the nation state in the cold war and the triumph of democracy in most of the world, has been for about 15 years, in public policy terms, an almost unrelievedly stupid country. America’s enemies could scarcely have devised a more suicidal programme than the one that was followed: outsourcing nearly 50m jobs while admitting 20m unskilled aliens; throwing American lives and $2tn after nation-building in the Middle East; and inundating the world with trillions of dollars of worthless real estate-backed debt, certified as investment-grade by the palsied lions of Wall Street. In comparison, even the hare-brained miscues that have endangered the eurozone seem Solomonic."

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