Posts Tagged ‘EMU’

CARNAGE

CARNAGE

First World War battlefield scene, 1918. A gate into the park of the chateau of Plessis-de-Roye. Defenders have made gun ports in the wall and the gate and have mown down the attacking infantry with lethal gunfire. After the painting by Francois Fla

Courtesy of The Pragmatic Capitalist 

The QE trade is unwinding in dramatic fashion as the market slowly realizes that QE is not in any way inflationary.  As I mentioned last week the smart money markets (fixed income and FX) were foreshadowing this as early as last week.  The air pocket created by Ben Bernanke created an incredible trading opportunity for investors who weren’t blinded by confidence in the Federal Reserve.  Just two weeks ago I said:

“Would add (to shorts) into any move over 1200. Would LOVE to see 1220″

My position is that the market is misinterpreting the economic impact of QE in the long-term. My market position has always been that we could rally to these levels and that at these levels the market has become overly optimistic. If I am wrong I will lose some money and move on. It’s part of the business.

Like clockwork the market touched 1220, bounced and sold-off.  The carnage across markets is broad.  The only things rallying are volatility, USD and US treasuries.  In essence, the leveraged QE inflation trade is collapsing.  You can thank Ben Bernanke for this.  When you create distortions in the market you get volatility, uncertainty and ultimately a collapse in prices. Keeping market prices “higher than they otherwise would be” is not a recipe for economic growth.

The most worrisome development is dissension inside the EMU.  Austria is now threatening to withhold their contribution to the Greek bailout unless Greece can prove that they have fulfilled their requirements for aid:

“The cost of insuring against default by Greece and the premium investors demand to hold the country’ bonds rather than lower-risk German Bunds jumped on Tuesday after Austria said Athens had not met aid commitments.

Five-year credit default swaps were 100 bps wider on the day at 950 bps, according to monitor Markit, while the 10-year yield spread between Greek and German government bonds was 15 bps wider at 923 bps.

Greece has not fulfilled commitments for its European Union-backed aid package, Austrian finance minister Josef Proell said on Tuesday, adding that Vienna had not yet submitted its contribution for December.”

That’s not the only concern in the markets.  Municipal bonds in the US continue to crash as a market that was priced for perfection now begins to price in some risk.  Commodity markets are…
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EURO EXPERIMENT: German Steel or Schmucks?

EURO EXPERIMENT: German Steel or Schmucks?

Courtesy of Gordon T. Long 

The European Crisis is proving to be more of an unraveling than a contagion. 

I have long written that the European Monetary Union (EMU) constitution and Euro currency should be viewed in the context of a risky bet versus a sound regional monetary strategy. The odds of the EMU’s survival are presently reflected in a plunging Euro, despite a historic and unprecedented intervention. This indicates that the EMU’s existence in its current form is now a bad bet. 

The good news is that this is becoming obvious and it suggests that the serious governance flaws of the 17 year Euro Experiment may finally be addressed. It took a crisis to see its first test which has been the generally accepted view of when the euro experiment would prove its viability. The established momentum of the EU since its inception and its broad acceptance prove that its survival is presently a matter of European preference with most Eurozone members feeling it an absolute necessity. We would therefore expect to see the EU constitution reformed. What should concern investors the most however is how the mechanics of what will be a ‘forced reform’ unfold. The highly visible process will have profound implications to the stability of global financial markets and to a very tenuous global economic recovery.  

I see the long standing philosophical difference between Germany and France to be at the core of this potentially very public resolution. During the recent behind closed door emergency bailout negotiations, these differences are reported to have come to the fore. Additionally, Frau Merkel and Monsieur Sarkozy are very different personalities. Will Frau Merkel show German Steel or as the German tabloid Bild proclaimed on news of the Euro bailout, become ‘schmucks’? Will Sarkozy the ever populist media hound prove to be a true diplomat or display what Germans perceive as insulting French arrogance? Unfortunately, the world must wait and watch while financial markets will no doubt fluctuate wildly on the uncertainty of the outcome. 

What financial markets are oblivious to is just how crafty these two politicians are. There is more going on regarding a European strategy than the media once again fails to recognize and which I will speculate on later.

For the full unabridged version of this article with slide presentation see: Tipping Points – Commentary

WHY
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Phil's Favorites

A summer of protest, unemployment and presidential politics - welcome to 1932

 

A summer of protest, unemployment and presidential politics – welcome to 1932

The Bonus Army stages a demonstration at the empty Capitol on July 2, 1932. Underwood and Underwood, photographers; Library of Congress

Courtesy of James N. Gregory, University of Washington

An election looms. An unpopular president wrestles with historic unemployment rates. Demonstrations erupt in hundreds of locations. The president deploys Army units to suppress peaceful protests in the nation’s capital. And most of all he worries about an affable Democratic candidate who is running against him without saying much about ...



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Zero Hedge

The Sword Of Damocles

Courtesy of ZeroHedge View original post here.

Submitted by Michael Every of Rabobank

The Sword of Damocles

“It’s not the substantive crimes and their definitions that count; it’s the institutions that will investigate, prosecute, and judge them that count. Language matters only if there are institutions that will make it matter. This whole law is about avoiding the involvement of such institutions.”

This is the summary of an analysis of Hong Kong’s new national security law by pr...



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ValueWalk

FedEx Corp.: Fundamentals Support the Price Increase

By F.A.S.T. Graphs. Originally published at ValueWalk.

Introduction

After reporting better than 4th quarter results on Tuesday, the stock price of FedEx Corporation (NYSE:FDX) has been on a tear. With this article, I plan to demonstrate that the fundamentals support the current price rise. Moreover, the fundamentals also suggest that it is not too late to take a long-term position in this leading air freight and logistics company.

Q1 2020 hedge fund letters, conferences and more

Yesterday, FedEx reported a surge in quarterly adjusted earnings of $2.53 per share compared to expectations of $1.52 per s...



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Kimble Charting Solutions

Gold / Dollar Ratio Sending Bullish Message To Gold Bugs!

Courtesy of Chris Kimble

It’s been a good year for gold bugs!

Gold has outperformed several asset classes as volatility and general economic uncertainty have come back to the forefront.

In today’s chart, we look at the ratio of Gold to the U.S. Dollar on a “monthly” basis. Gold bulls want to see this ratio trending higher… and it is.

In fact, the rise has taken the Gold ratio to an important juncture. It is working on a dual breakout at point (2).

Thus far, price is well above horizontal resistance marked by (1), and just above trend resistance at (2). Should the breakout hold, it would be historically bullish for Gold (and precious metals). Stay tuned!

This ar...



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Biotech/COVID-19

The US isn't in a second wave of coronavirus - the first wave never ended

 

The US isn't in a second wave of coronavirus – the first wave never ended

The U.S. as a whole is facing a huge surge in coronavirus cases, but the differences between states like New York and Florida are striking. Kena Betancur/1207979953 via Getty Images

Courtesy of Melissa Hawkins, American University

After sustained declines in the number of COVID-19 cases over recent months, restrictions are starting to ...



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The Technical Traders

Long-Term Consumer Discretionary Winners

Courtesy of Technical Traders

I was live on TD Ameritrade TV talking about consumer discretionary, staples, and utility sectors. Explained is a unique crossover on how some discretionary stocks are also becoming a consumer staple.

Get My ETF Trade Signals, Entry, Targets, and Stop Levels – CLICK HERE ...

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Chart School

US Dollar with Ney and Gann Angles

Courtesy of Read the Ticker

Where is price going, is there strength or weakness in the chart?


Previous Post on the US Dollar : Where is the US Dollar trend headed ?


The question is always what will the future price action look like ?


This post will highlight the use of lines generated by angles. Not trend lines, as trend lines require two known points on a chart, where as angles require only one known point and a angle degree to draw a line. The question then becomes how is the angle degree determined.



There are two theories: ...

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Lee's Free Thinking

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

 

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

Courtesy of  

The COVID 19 pandemic is, predictably, worsening again in much of the US. Only the Northeast, and to a lesser extent some Midwestern states, have been consistently improving. And that trend could also reverse as those states fully reopen.

The problem in the US seems to be widespread public resistance to recommended practices of social distancing and mask wearing. In countries where these practices have been practi...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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