Wednesday, April 30, 2008

The Fed strikes again.....

The Fed as expected lower the Fed funds and discount rates both by 25bp today. This was widely expected. There were two members who were against the move. These two members wanted no change. This, to me, is the direction the Fed is going. No more rate cuts. If credit tightens more, I believe they will take steps to provide funding, similar to what they did a few weeks ago when providing funds via the discount window to Investment houses. Inflation is a major concern,not only in the States but worldwide. I believe that the next move in rates will be up, and not that far in the future (6mth or so). Inflation can not and will not be allowed to get out of control.

Today S&P raised Brazil to investment grade. This is a very big deal and one that has been expected for a while. Being investment grade allows funds to purchase Brazilian debt and place it in their portfolio's. This will lead to ALOT more purchasing of Brazilian debt going forward. This reminds me a lot of the Asian crisis a few years ago. Every time a country was taken off investment grade forced selling of debt and securities ensued. Now a similar situation will happen in reverse. I would assume at a slower pace but still occur.

Good luck and Good Forex Trading


Tuesday, April 29, 2008

Month coming to an end....

And it can't happen to soon for me. This month has been a struggle. The basic premise for all me trades has been wrong. I have had very limited conviction, and therefore no profits. Today looks like more of the same. Part of my problem is that since I have limited ideas I have been reaching out to friends for their ideas.....This is always a bad mistake. Someone elses ideas with little conviction equals LOSSES.

The good news is that I am above ground.

Good luck and Good Forex Trading


Friday, April 25, 2008

Market setting up for the Fed

Dollar futures have been on a steady decline as has the Euro the last few sessions. I think this is in response to an expected pause in Fed policy after next weeks meeting. As readers know I have been calling for a pause, but now few that we will get a 25bp cut on Wednesday followed by a statement highlighting inflation and basically letting the market know that there are no more interest rate cut's in the near term future. I think this is very smart as inflation is a big problem. Forget what is being reported, look at the essential things that you use everyday.

Gas, yesterday I filled up my 2004 Ford Sport Trec, cost $80.
Breakfast, $3.50 for an egg white sandwich (trying to watch my cholesterol) and $1.50 for coffee (street cart not a designer brand)
Lunch, $9.25 for a salad and a bag of chips (there goes the cholesterol).

The cost of day to day essentials is going up in a big way. This is money right out of your pocket and although the Fed will not admit it, they see the effect's and will try to address it. Crude is the key. They need to find a way to get the price down. Holding rates steady will not do it, but a dampening of demand will. From the States and overseas (specifically India and China). I think after the Olympics China's demand will lesson (no more window dressing) and India is having some issues with food prices and shortages. I am looking for a global slowdown in the weeks ahead, with rates moving higher (I know this makes no sense) to combat inflation pressures.

Good Luck and Good Forex Trading.

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Thursday, April 24, 2008

Paulson, the Fed and the Economy

I am beginning to wonder why the administration is not jumping on opportunities to get the dollar higher and in turn drive crude oil lower. Today is an example. Crude is showing weakness, currently at 115.64 dollars per barrel. When Paulson comes out with statements like

Strong dollar in U.S. interest, G7 forex language speaks for itself.

U.S. economy in a rough path but fundamentals strong and will be reflected in dollar value.

Paulson declines to comment on whether dollar has overshot to downside.

It seems that the market gave him an opportunity today to at least start the reversal of the Dollar. Why not come out with a strong statement saying that the dollar HAS overshot. Of course maybe he doesn't believe this but I think that the Fed (and as an extension the Administration) is in a very difficult situation. Inflation is high, very high. The Economy is very weak. In Egypt and India there are riots in the streets over Food. Here in the states Costco is limiting purchases of rice to it's customers. Vietnam and India, two of the world largest rice exporters have placed temporary bans on some rice exports due to soaring inflation and poor harvests in the region. This according to an article in todays WSJ.
All in all a scary situation and one that I think the administration could make better by being more aggressive. Rate's really need to be higher. Inflation, which is much higher then reported through CPI, is a killer. Gas is at $3.70 per gallon. Wait till it gets to $6.00 , and it will if crude is left unchecked, the economy will collapse.
I am not wishing this happens, and would be quite happy to be wrong.
Good Luck and Good Forex Trading.


Wednesday, April 23, 2008

So my son get's a job.....

This week my youngest son began his first paying job. Being an advit baseball fan he decided that he wanted to umpire Little league games. This is the first year that he is eligible to do this as he just turned 13 and now plays on the big field. He went to the Little League office and received some instruction and was also given a ball's and strike counter, similar to the one in the picture. Being the good Dad that I am, I showed up at his first game to give him some support. Being only 13 they always pair up the kid's with a "professional" umpire. The umpiring crews do a very good job in my town. With this pairing, the kid's cover first and second base, while the Head umpire call's, ball's, strike's and foul balls. No coaches are allowed to argue a call (you would be surprised how many do !) and for the most part this rule is followed. The Jr umpire is expected to keep track of ball's and strikes in case the Head umpire losses track or a coach asks for the count. That is why my son was given the counter. He showed it to me and mentioned that the knobs were a bit stiff. I agreed but stated that they worked well enough.

He did a great job at his first game, called every play correct and even had a very close call at the end of the game which he made a clear, strong and correct call. I was very proud. After the game he came over to the house and told me about how everything went. After he was done he again stated that the counter was a little stiff, this time adding that he thought it would be best if he bought a new one (can you see where this one is headed?). Well I agreed, I told him now that he earned $20 dollars for the game, if he wanted to spend part of his earnings on a new counter to make his job easier "I fully encourage you to do it".

His reaction was "You mean I have to pay for it myself"?

So let's get this straight I said , you want me to buy you a new counter when the other one works just fine so that you can do your job easier. You earn money, if you want a new counter pay for it yourself.

So far no new counter has been purchased. You have to give him credit for trying, and I must admit I was laughing on the inside. I expect him to continue with his umpiring duties, whether a new counter will be purchased or not I am not sure, but I will keep you posted.


EurAud..... Looks Heavy....


Hillary wins Pennsylvania

Hillary won Pennsylvania yesterday as expected by 10% of the vote. This will keep Ms Clinton in the race a little longer. Even with this win it seems a real uphill battle for the former First Lady. Money is scarce and with the way the Democrat's break up the Delegates, even when losing you get some. With Ms Clinton's prior win in Ohio (decisive) she only gained 10 Delegates and in Pennsylvania she will probably get a similar number. Obama should easily gain those back with a substantial win in North Carolina. What does all this mean....well it means that the Democrat's will have to wait to focus their energies on McCain.

It looks like it will come down to the convention and that is not going to be a good thing UNLESS some "back door politics" gets the candidates to come to some sort of an agreement. From my perspective Obama is a formidable foe for the Republicans. Basically from his "grass root's" campaign. He raises lot's of money, a little bit at a time. This may be simple thinking but if you get $2,300 (the maximum allowed donation) from one donor or $23 from 100 donor's, which would you prefer? It would seem to me that the $23 donor would give you 100 votes against 1 for the $2,300. This is why I think Obama is difficult to beat. He brings people out to vote and come November that could translate into a victory.

Good Luck and Good Forex Trading.


Tuesday, April 22, 2008

Oil at 119.37

With Oil topping 119.00 dollars per barrel today and plenty of talk on the cable stations about runaway food prices (Costco talking about people stocking up on Rice...) I see no way that the Fed goes on April 30. If they do (and I put that chance at 5-10%) then I expect a firm statement that the Fed is shifting toward a more hawkish approach due to inflation.

I believe the top is in, with regards to the Euro......Why you ask...Because I have finnally gotten LONG !

Good Luck and Good Forex Trading.


Saturday, April 19, 2008

The Knick's finally dump Isiah....

Yesterday marked a turning point (Knick Fans can only hope) in the fortunes of the New York Knick's. They finally parted ways with their President and coach Isiah Thomas. This was a good, and frankly was the only move the Knicks could make, after four years of futility. I had little interest in watching a game and did not attend one all year. Why go? The players didn't seem to care, nor did the coach. Even the owner Jim Dolan stopped attending home games a third of the way through the season. Currently Isiah has an unnamed position with the team. No one report's to him and he reports directly to Walsh, the new basketball guru. This "position" is basically so that Jim Dolan get's something for the 24 mio dollar contract he gave to Isiah last year, and allows for a more gracefull exit for Thomas in the weeks to come.
I think this is definitly a step in the right direction. Sometimes getting things sorted out first requires that you get rid of everything in the past. This is certainly the case for me when I am trading. Currently I have been trading very poorly. Markets are moving. Interest Rate futures globally are extremely volitile and the currency markets have been trending. Me, well I have been standing on the outside and looking for opportunites. Most of the one's that I see turn out to be wrong. Yesterday, in the spirt of the NY Knick's I began purging myself of all of my positions. This is not always easy with Emerging Market currencies. I found it difficult to get out of my Chile fixing risk, and my Peru o/r position, but I have definitly moved much closer to "square".
This has proven to be a very valuable tool in getting my trading house back in order. It gives me new perspective while freeing me up from the stressesof positions that were not working. Square up and start again. Remember, there is always another opportunity, you just have to be in the game to take advantage of it.
Let's hope that the Knick's, now that the have purged themselves of Isiah Thomas, can get their house in order. All New York Knick fans, and the NBA family in general hope so too.
Good Luck and Good Forex Trading.


Thursday, April 17, 2008

Merrill Earning's disappoint

Merrill Lynch reported it's earning's and they came in below expectations. They lost $2.20 per share against estimates of $2.06 per share. This is definitely disappointing but will it have an impact? I am not so sure. The last few days has seen Financial institution earning's coming in below expectations. This has not stopped commodity prices and stocks from rallying. It also seems that the Fed Governors are preparing the market for no cut in rates at the April 30 meeting. Things are getting better (although only slightly). Lending is beginning to loosen up. Credit spreads are tightening. Libor fixing's are more in line with cash. This to me is all a sign of the credit crisis working its way through the market. We are not done yet, not even close, but with commidity prices running up it would seem a good time to sit back and take a look and allow time for the rate cuts to take effect.

Good Luck and Good Forex Trading


Wednesday, April 16, 2008

Triple Top Violated...

The Euro broke higher overnight and is currently trading at 1.5960. I have been stopped out of my Euro position.

As the old saying goes....

The Trend is your Friend.....

Obviously shorting the Euro is not !!!

Good Luck and Good Forex Trading.


Tuesday, April 15, 2008

The Quote of the Day

The Quote of the day is quite accurate in my mind. How many times when trading do you cut a trade (after a long painful run) to find it to be the top or bottom. For me this happens quite a bit. What I mean is when you run a possision for an extended period of time and it is moving against you, the time you deciede to cut it out is invariably the top or bottom. I must admit it is a very good feeling when you finally make the decision to cut a bad position. AAAHHHH.... Relief. I think the secret is not to get to that point. Do not allow a bad position to linger (I say this as my shoer Usd/Clp position continues to creep higher !!). Cut it before the stress is to much and you need to pull the escape cord.

Easier said then done but it is a vital element to being a successful trader.

Good Luck and Good Forex Trading.


Tax Day...

Today is Tax Day, the one day a year you get to pay Uncle Sam for all he has done for you. Here is a guy who has learned how to enjoy HIMSELF while possible making the pain of sending that check a little less painfull.

Monday, April 14, 2008

Triple Top in play...

The post printed April 10 describing the triple top in the Euro is getting close. The three highs I was talking about are, Mar 17 (1.5904), Mar 31 (1.5895) and Apr 10 (1.5912). We should not go up near them (thus being a quadruple top and then I would think we would take it out) and in theory come off from currecnt levels (1.5820).

As many readers know I am not a technician. Rather I view a chart from the "big picture" to get perspective. I do not think we make new highs. I am short here and will stop out above 1.5915.

Good Luck and Good Forex Trading.


Saturday, April 12, 2008

Recession.....What Recession ???

I like most other people in the Financial community have come to the conclusion that we are at a Recession's door step (at least). Forget the technical term (two quarters of negative growth), but rather the realistic term for it. Employment contracting, Stores closing, basically less people working and less opportunities to other jobs. I know that talk in my industry is that bonus's will be bad. As one trader put it "Why would a bank pay when there is little opportunity to move to another institution". I think this is basically correct. Another friend of mine on the Brokerage side of things told me that he sees more traders moving to that side (as they lose their jobs from mergers, large losses, or closing of divisions), causing established brokers to look to "lock in". The feeling is that with less banks (no more Bear Stearns) and traders jumping to the brokerage side, find a seat (preferable with a 2-3 year contract) and reestablish yourself over the next year or two it takes to come through this. Makes sense to me all around.

Now on to my original question. Why if we are at Recession's door step am I having so much trouble getting workers at my home. Currently I am trying to fix a water problem in my basement. I think it all stems from drainage on the outside of my house. Of the 6 landscapers that I called only 3 showed up at my house. Only two came back with an estimate. My town required me to get a permit for some of the work, This Permit required me to get a "stamped" architectural drawing of my plans. I then called 4 archtect's. Not one called back ! Amazing. Couple this with the last few times that I stopped out for dinner and fornd the resturants/bars PACKED with people and I ask the question What Recession?

I am sure different parts of the country are effected quite differently, but it seems to me that as always the U.S. consumer is very reslient and I would not be surprised to see us pull out of this sooner rather then later.

Good Luck and Good Forex Trading


Friday, April 11, 2008

Interesting Article on Taxes

With the Tax deadline approaching, I came across a very interesting ARTICLE concerning the future of our Tax Code.

Good Luck and Good forex Trading


Chilian Central Bank going to intervene

The Chilian CB announced today that they are going to intervene in the markets by buying 50 mio usd per day for the next month in an effort to increase their reserves to close to 8 billion dollars. This has caused the market to open much higher. Currect price 444/448 after a close at 434/435. This is big news I think as they are signalling clearly that they want the currecny apprciation to stop.

Good Article on BLOOMBERG

Good Luck and Good Forex Trading


Thursday, April 10, 2008

Euro looks like a triple top

Alot of talk in the market today of a triple top in the Euro. Taking 1.5500 out on the downside would make things very interesting.

Good Luck and Good Forex Trading


Seems we are back to risk reduction

The markets this morning are a follow thru of yesterday's action. Namely Risk Reduction. I think we will see more of the same as the week grinds on. For the previous few weeks we saw bad news being pushed aside. Really I am not sure why. Now the market is clearly not as happy (or at least comfortable) with what the future brings. The IMF is calling for slower global growth. Inflation is a continually growing problem (Crude at 111.38 after touching 112 yesterday), as commodity prices continue to move higher. I have heard talk that Commodities are to high. I too have said this, but everyday seems to bring new, higher, levels. The dollars shows no sign of strengthening. As one of my friends put it yesterday "The Euro is on the Do Not Short list". So True !

Today the MAS (Singapore CB) Re-Centered its band lower. This was basically expected as the currency has been trading at the stronger end of the band for some time.

I think the messgae here is clear. The U.S. Economy is weak. I think this will spill over into the rest of the world (I know I have been saying this for a while) and we will see a major Global slowdown. Stay short dollars for now. Look for interest rates globally (in non EM countries) to come lower. In EM countries I am looking for higher rates. The Global Eonomy is in a very difficult situation. Inflation is a real problem. Lowering rates will make this problem worse, but is there another choice? I am not sure.

I wish I had all the answers, but I do not. Rather I perfer to stay on the sidlines with smaller risk and see where it takes me.

Good Luck and Good Forex Trading.


Monday, April 07, 2008

Coments out of Europe...

Lagarde: Thinks there will be concerted,coordinated approach on markets, FX from EU at G7
Juncker:Level of oil prices will be here for a long time
Juncker: EuroZone growth prospects have gotten worse.

Seems they are trying to talk the Euro down.

Lets see if it helps

Good Luck and Good Forex Trading