FXstreet Webinar on Regulations
Here is the much requested link to the FXstreet webinar on Forex regulations.
http://transcripts.fxstreet.com/2008/05/how-new-us-regu.html
Enjoy !
Categories
Archives
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- July 2006
- June 2006
- May 2006
- April 2006
- February 2006
- January 2006
- December 2005
- November 2005
Okay, Now I Get to Rant about Oil
What the crap is going on?
It's the speculators (we should tax traders' profits on oil trades)!
It's the politicians (our middle east policy caused all of this)!
It's drivers (we shouldn't drive our cars so much)!
I am kind of tired of hearing all of this stuff, and still see oil climbing. Has anyone stepped up to the plate? No. Well, I take that back: President Bush went to Saudi Arabia and asked them to increase production by 1 million barrels per day.
They said no.
Is that the extent of the work that will be put forward here? I keep hearing from people that "Europeans are used to paying this much, you should get over it!" Here's news: I am not going to get over this. We are paying more money for a commodity which enriches nations which support terrorism. We are paying more for a commodity which damages the environment. We have less money and we have more problems. Our dependence on oil is ridiculous.
Drilling in Alaska, or in your backyard, or in your bedroom, is a temporary answer. That doesn't solve the problem now. Oil is probably going to stay above $100 per barrel for a long time, and maybe never go much further than that (maybe to $75 again). The rest of the world is just using more of it. And will keep spending more money to get it.
This is a huge problem and it appears that we're all asleep at the switch.
Perhaps no one is really speaking out with any real solutions or anger because they fear the oil industry. That's logical, but it's lame. We elect people on the basis of their supposed ability to get difficult (or scary) things done. Our elected officials might worry about the effect on the electorate (don't tee off people in an election year). They might fear the middle east, or the bogey man. But one thing remains: the price is skyrocketing. Even if there is an infinite supply of the stuff inside the earth, I have less and less interest in supporting the efforts to get at it.
I am still waiting for someone to step up and really publicly start caring about this.
There is a great opportunity at this point to start to watch oil, and the rest of the energy sector, as it becomes the next bubble.
Reykjavík Under Seige?
[you can listen to our broadcast about this here]
It has the world’s highest literacy rate. People live longer in Iceland than any other country. They are supposedly some of the happiest people on earth if you believe a new book out. Here is what is happening to the one of the world’s smallest independent economy and its currency:
1. Inflation is out of control. It’s now at 9%.
2. Central bank interest rate: 15%.
3. Performance of the currency (the krona): -20% against the Euro since the start of 2008.
Who’s to blame? The central bank asserts that it’s the fault of hedge funds and international financier Michael Weist, who operates a currency trading empire out of Malaysia. I am not so sure about the hedge funds, but I would keep an eye on the Weist guy. Sounds shifty.
The central bank really is arguing that international financial players are preying upon a difficult situation in the country and wreaking havoc on the economy. You know, doing wild speculative things that you only see in financial documentaries for people over 18.
But is that really the problem here? Let’s go back and see how the country handled its own finances, and we’ll see if we can trace the line of responsibility for the current problems back to anyone else. In the last 5 years, the three major Icelandic banks issued billions of dollars in cod-bonds.
These are bonds that offered really, really attractive interest payments. Who bought these bonds? International financial players like, oh, say, hedge funds. These hedge funds, as we all know now, sold Japanese Yen and bought high-interest bonds in New Zealand, Brazil, Hungary, and yeah, Iceland. Lots of them in Iceland. Billions of dollars of them. Foreign debt, in the last 4 years, quadrupled. And you know what these banks started to do when they realized they were on the hook for these huge interest payments?
They hedged their bets. Sounds smart, right? That’s what intelligent traders do.
These banks sold their own currency, the krona, in futures contracts. They entered crazy derivatives deals with leverage and bet against the value of their own currency. When the krona started to fall, they made huge amounts of money and everyone was happy.
At the same time the banks were doing this, the hedge funds that were playing the carry trade game were buying and selling – and some of you already guessed it – credit default swaps (CDS) to hedge their own risk, just in case the Icelandic banks weren’t able to pay the debt.
So, let me get this straight:
1. The Bank of Iceland set the base interest rate high.
2. This attracted foreign capital on a massive scale.
3. This launched the economy into a frenzy.
4. Icelandic banks sold their own currency to hedge the bet.
5. Hedge funds did the same.
6. Now the krona is cratering.
Does this seem like an international monetary conspiracy to you? Was the central bank angry when foreign capital came in and boosted the economy? Why would they be upset when foreign capital is leaving and causing problems for the economy? The same country whose banks created “cod-bonds” to specially attract international hedge funds is feeling the effects of having created the entire mess in the first place. You can choose to raise interest rates, or allow your banks to trade on leverage and create risky financial instruments. You can’t choose the consequences of those actions.
It’s not so different from any losing trader. We love the system we’re using when, with outrageous leverage and sweet euphoria we make tons of money. And we become disenchanted with trading for a living when it all goes wrong. We start to say things like, “It’s not actually possible to trade for a living,” and “My dealer stopped me out,” and so forth.
Maybe, I suspect, we shouldn’t have fallen for the oldest trick in the book, which it seems that even countries are not immune from: we tend to increase our bets and greedily want to accumulate as much as possible now, without regard or attention to the longer term consequences of our selfishness.
Wal-Mart Dollars and the Next Boom
What does it take to have a strong economy since 1990?
1. Capital: the world has to be awash in money. In 1994, Bill Clinton signed into law a regulation that allowed banks to hold less in reserve. The world became awash in cheaper money. Greenspan lowered rates significantly during the latter part of the decade. In 2001, the Fed aggressively cut rates and kept cutting them into the next year, and we saw 1% for over a year.2. An asset class that attracts the ordinary investor and institutions alike. In the 1990’s, we had stocks and in particular IPOs. It was the decade of equities. It will forever be known as the tech boom, most likely, but in general, the last 5 years of the decade were simply ruled by a white hot stock market and an institutional appetite to invest in startups. Billions of dollars were poured into new companies who developed technologies – many / most of these companies failed, but the result was a huge influx of advanced technology into society.
In the first five years of 2000, housing ruled the American economy. As investors who were burned by tech stocks looked for the next big thing, many of them felt more comfortable buying real estate than investing in the stock market. They were finally listening to their mothers, who said the stock market was risky (a Great Depression era mentality) and put their money into a hard asset like real estate. I have a friend who says that trading and real estate are different, because when something goes wrong with your trade, you can quickly go broke, but when something goes wrong with real estate, you can simply hold on. Well, if you look at a heat map (www.hotpads.com) of foreclosures in the southwest, we’ll all agree that holding on to underwater real estate isn’t what is happening.
Both the stock market and real estate bubble had something not only for the regular investor, but more importantly, had huge appeal to the institutions and funds who needed to park massive amounts of money. It was easy enough to invest in startups, venture firms, office parks, housing developments, and the returns were great during the good years.
So what’s happening now? It seems we’re due for a contraction, which we’re getting right now, before the next bubble comes along. But issue is: what’s the next bubble? Where’s the next driver of the American economy?
We are, as a world, swimming in a sea of capital. There are trillions – yes, trillions – of Wal-Mart- and Petro-dollars in the world today. “Wal-Mart dollars” is my term for the export dollars created when Asian nations ship us cheaply made products and we send them our hard-earned cash. You know what petrodollars are.
So we’ve got the first element: the world’s got money. And piles of it all around us – to the Far East (Wal-Mart dollars), the South (Mexico has its fair share of Nafta-Flavored Wal-Mart dollars), and the Middle East and North (Islamic Petrodollars, and Canuck petrodollars). There are still billions of private equity and venture capital dollars in the states. We’re not hurting for cash as a world right now, and that’s why it’s so easy for WaMu, Wachovia, Citibank, Morgan Stanley – all of them – to raise more capital very quickly. It begs the question of why Bear Stearns couldn’t be helped at the last minute by a big investment rather than a big bailout, but that’s a question for another time.
Do we have an asset class that fits the bill? I think we not only have one, but we have two potential candidates.
The first is health care. Baby boomers were born between 1946 and 1964. There are 82 million of them. The oldest ones are now 62 years old. And for the next 20 years the oldest ones will reach 82 and the youngest 62. That means we’re going to get about 80 million super-users of health care over the next 20 years. Medical equipment, pharmaceuticals, hospitals, disease prevention and curing, and genetic research are just five areas that could use loads of institutional capital to grow. This is probably the next bubble, and it’s going to be huge. This industry is easy for ordinary investors (through stocks) and institutions to invest in.
The second is energy. Energy efficiency is the harder of the two to for me to believe in. The drive to wean ourselves from oil in the states is going to go slower and take more political effort than we might have. If we did muster the courage to do this as a nation and a world, we could launch a huge technological boom. Most of this, however, seems like it would have to come from the government and private sector: there are simply not enough areas for the ordinary investor to participate in – there aren’t enough alternative energy stocks to go around just yet. Maybe that can change.
The point to this enormous post is to say that the conditions are right for another boom. Sure, we need a period of cooling off. We need to shake out the bad people from Wall Street, bail out some rich people, save some banks, contain the cost of food and energy, and finish off the mass foreclosure process around the country. That’s going to take 12-18 more months.
And then, let’s bring on the next boom.
Let's Not Spend and Have a Recession Instead
If you think that consumer spending is important to the economy, and, like, you probably do if you live on Earth, then this ought to interest you; it's the XRT index -- the S&P Retail Index:
Consumers in the United States have stopped spending. Consumer spending is 66%+ of total Gross Domestic Product for a country. Recession, anyone?
Continue reading "Let's Not Spend and Have a Recession Instead" »
The Wisconsin Cheese Index
Do you like “trading the news?” Then the new-news is any news about the bailout. That’s the big news – look for Fed statements, Treasury speeches, and especially a speech by the President which I would assume has to come in the next month. If it doesn’t it will just mean that we’re putting off a statement by the commander in chief of the economy. These statements and speeches will have huge impacts on the RPP’s – the Risk Proxy Pairs:
USD/JPY, EUR/JPY, GBP/JPY , GBP/CHF, USD/CHF
These are pairs that are prone to move a lot when news hits about the state of the world economy. A lot of risk is bundled up in these pairs: the JPY is all about the carry trade (you think that has gone away, but it hasn't quite yet fully played out); the CHF is about Gold, the world's hedge against inflation (which might not actually be a problem, as we'll be exploring on the radio show this week).
It’s mildly interesting to watch what happens to the US dollar after the Non Farm Payroll report. But what you will see after Trichet of the ECB announces the full extent of the European Economic Problem in April or May – that will make a Non Farm Payroll report look like the Wisconsin Cheese Index, which is a fake report I made up to prove my point. Actually Max made it up, and it’s the greatest fake report ever.
The Bailout
For those of you who live in the United States:
Let's suppose that a national referendum were held next week. You could vote for or against the following proposed action by the US Government:
The US Government will take control of 20 of the 50 largest US regional banks which have become insolvent due to overextension of credit to subprime borrowers. All shareholders in these banks will lose 100% of their investment. The government will keep these banks' doors open. All deposits up to $200,000 (twice the current amount) will be guaranteed. All other deposits above $200,000 will be wiped out.
Would you vote for that?
How serious do you believe the current economic crisis to be?
Let's add one line to the law, and now think about your answer:
In addition to rescuing these banks through nationalization, the US Government will honor severance packages to bank executives who lose their jobs as part of the process; this includes honoring and paying out as much as $50 million to CEOs of these banks.
Now what?
What is Crazy Risk? Why does Leverage Matter?
Martin Wolf, in his excellent column for Financial Times, points out that a 15.4% annual return for a hedge fund would be "handsome." How many of you that read this blog would be willing to show up at a trading expo and brag that you had achieved a total return of 15.4% over the last 12 months of your trading?
He then goes on to talk about how a mediocre hedge fund manager can produce such handsome returns in seemingly easy fashion by allowing himself to go deep into debt (leverage) at risk of blowing up the fund. What is this excessive risk? Here's a quote:
Hardly a week goes by without the implosion of a hedge fund. Last week it was Carlyle Capital, with an astonishing $31 of debt for each dollar of equity. But we should not be surprised.
I am not making that up. That's what smart financial people believe to be "astonishing" leverage. 31 to 1. Most currency traders trade with 100:1 leverage.
What makes leverage such a big deal? Why does leverage, in and of itself, present such a problem?
First of all, the availability of high leverage encourages a trader to amass a large trading position, even with a small account. Let's take a trader with a $5,000 account. Let's say that his dealer allows 100:1 leverage. This trader puts up $2,000, and in turn is able to command a $200,000 position in the market. Each pip / point that the position moves for him, he makes $20. If the market moves in his favor 50 points, he's made $1,000. That's nearly enough to make a car payment, buy some groceries, perhaps even make a rent payment (at least in West Virginia, where I live -- it could even pay a mortgage).
This all sounds good so far, right? The trader makes a good trading decision, makes a 10% return in one trade, pays some bills, and moves on. Leverage seems to be the friend of the trader. Where else could this person put $5,000 to work so efficiently, so quickly, with such seemingly easy profits? The stock market? Heck no!
In the stock market, this trader would put $2,000 up -- and then be able to command, at most, a position of $4,000 worth of stock (those are the rules -- you can only trade with 2:1 leverage at most in the stock market). If the market moves 50 points, which is unreal in the stock market (can you imagine GE moving 50 dollars in one day?), the trader is likely to make about $50. No wonder so many people are flying out of stock trading and racing into margin currency trading.
This all sounds good so far. The currency market simply allows for a maximization of profits with a small account.
The problems start when this trader begins to have some losses. Instead of making 50 points and $1,000, he loses 50 points and draws his account down to $4,000. If he has a 70/30 trading system that wins on average 7 times for every 3 losses -- he could experience 1, 2, 3, 4 -- or more -- losses in a row and suddenly be looking at a severe reduction in his trading account. Maybe this trader is disciplined in every other way. Maybe the system is tested. Maybe he's a stable person.
But if he loses just 6 times in a row, he's going to have lost $6,000. Um...that's more than he has in the account. He can't even go more than 5 losses in a row.
The problem isn't that leverage exists or that it is available. It's that most of us, when we start trading, don't realize how fast we can run through our entire accounts. We risk more because we can make more and we end up losing more.
Continue reading "What is Crazy Risk? Why does Leverage Matter?" »
You Have Got to be Kidding Me
For those of you who are unfamiliar with John Meriwether, he's the dude that made a fortune on Wall Street in the 80's in bonds (the securitization of mortgages, as I remember, but I could be wrong) and then went on to co-found and lead Long Term Capital Management. LTCM blew up when the partners, including Nobel-Prize winning economists, failed to appropriately manage their risk and lost $3.6 of their own and investor's money.
It didn't take Meriwether long to start another hedge fund -- in fact, the ink was hardly dry (about a year) on the LTCM rescue deal, when he went out and raised another zillion dollars (ok, it was more like $1 billion) and started running the money again. Keep in mind that if his management fee was 1% of assets, he was pulling in $10 million per year just to open the doors. Where I come from, we have a saying about that much money: holy crap.
Now Meriwether is in trouble again. Bloomberg reports that his fixed-income (bond) fund lost 24% year to date. This is about 10 years after the collapse of LTCM.
I just wanted to mention this, since it might be a good time to bring up the fact that none of us are immune to making the same mistakes twice. None of us learn our lessons so good that we no longer require adult supervision when trading. The same rules of risk apply to you and me, and to John Meriwether, to your forex dealer, to Bear Stearns, and to European Banks (waiting for the other shoe to drop).
When you start thinking that the rules of risk management don't apply to you, that's when risk comes knocking at your door.
NOTE/UPDATE: There are two good books worth reading about all of this and, in particular, John Meriwether. The first is Liar's Poker: Rising Through the Wreckage on Wall Street
Panic at the Discount Window
Oil and the Dollar. Yikes!
Australia Takes a Hike
Brandi sent an intelligent question tonight:
If the Australian Reserve Bank hiked rates today, then why would I be selling the pair (which I have been for a few days)?
It begs the question:
Is a rate hike really good for the AUD? Maybe it is. Maybe it SHOULD be. Perhaps in the beginning stages of a global economic slowdown (meltdown?) the Reserve Bank is worried about stagflation -- a slowing economy but higher prices. Perhaps China's demand for raw materials is enough to keep commodity prices high indefinitely. Perhaps those high prices will continue to filter down into the price of regular stuff in Australia.
But what if traders see the hike as the last in the economic up-cycle, and it's all downhill from here? What if they read the statement (click here to read it) and they think, "Holy crap, they emphasized the global economic slowdown?"
Then it's bad for the AUD.
Just my two cents. Happy Monday evening. If you live in a U.S. Super Tuesday state, then please remember to vote tomorrow.
What to Do in Times Like These (Revisited)
The challenge: make money when the market is going to Hades in a handbasked. When the GBP/JPY falls apart like a high school relationship, and the US Stock Market turns traitor and rejects the demand that it perform well if interest rates go down (and think about it: if interest rates are headed down because the economy sucks, then no one is going to buy any stocks for the short term).
So, what to do now? I was looking at some order flow / retail positioning information today, and I was shocked to see how many traders are still hanging onto long GBP/JPY positions. The carry trade is exploding all around them, and there is a huge overweighting of traders on the buy side. They are hanging on, hoping that it comes back.
Here are five things that you can do right now in times like this:
1. Stop hoping that the market comes back. Make a realistic assessment of how much further down the market can go before you've lost your entire account. Talk to a friend, a spouse, anyone who you can trust that will hold you accountable to get yourself out of the bad trades that are threatening to destroy your account.
2. Ask yourself: was I ready to benefit from the recent implosion? Was I prepared to make trades that benefit from a market decline? If you are familiar with options, ask, "Was I protecting the downside by buying some options as insurance?" If the answer to this is no, think about how you can do things differently next time.
3. Get in touch with someone who knows more than you about the market -- someone who is making money right now and has been for a long time -- and show them your portfolio.
4. Consider the benefits of having a (substantial) portion of your portfolio invested for the long term rather than the short term.
5. Remember that no one knows where the market is going tomorrow. Anything can happen. Given this truth, what are you going to do about it? How are you protecting yourself from the downside risk?
Continue reading "What to Do in Times Like These (Revisited)" »
Oil Production vs. Prices
We talked about oil prices and production this morning on the radio show.
You can click here to get the full spreadsheet.
And here's the chart that shows price rising and production falling. The point of this all was to highlight that production isn't going to go up very quickly, very soon. And who's going to be the big winner in all of this? The Canadian Dollar. You can click on the chart below to make it bigger.
The Dow and the EUR/JPY
There has been some talk this year, notably by Boris Schlossberg of DailyFX.com, about how the Dow and the EUR/JPY have some amount of correlation between them -- meaning, that movement in one is somehow correlated to movement in another. Tonight I have been sitting in a hotel room in Vegas and, because I am a currency nerd, I decided to find out for myself if what Boris said is true.
I gathered data from Tradestation and from Yahoo! Finance, and with a bit of help from Ken Fisher, whose new book
Okay, let's get to the conclusion and then I can tell you what I did.
For 2007, it seems that the Dow and the EUR/JPY have a Correlation Coefficient of 83%. That's quite a number. Here's a chart to show the results graphically, and then we'll get even deeper into it (you can click on the image below to make it larger):
Thanks to I. Hills, a student, for the graph.
Here's the spreadsheet. I simply took the data, and cleaned it up a bit to reflect that the Dow and the EUR/JPY did not always trade on the same day (remember fx trades one day extra per week). Then I ran the formulas.
Just because the two are correlated does not mean that there is a causal link -- in other words, that movement in the Dow causes movement in the EUR/JPY. But I do find it interesting that the Dow is correlated to the EUR/JPY. I want to do this for Oil and the CAD, which obviously has already been done but I want to see it for myself.
More on what the numbers mean:
Correlation Coefficient (from Wikipedia): "The conventional dictum that "correlation does not imply causation " means that correlation cannot be validly used to infer a causal relationship between the variables. This dictum should not be taken to mean that correlations cannot indicate causal relations. However, the causes underlying the correlation, if any, may be indirect and unknown. Consequently, establishing a correlation between two variables is not a sufficient condition to establish a causal relationship (in either direction)."
R SQUARED (From Investopedia): "A statistical measure that represents the percentage of a fund or security's movements that can be explained by movements in a benchmark index. For fixed-income securities, the benchmark is the T-bill. For equities, the benchmark is the S&P 500." Ken Fisher sums it up better when he says that this number helps you to be able to say what percent of one variable's movement you can blame on the other variable. That this number is 70% for 2007 on the DOW-EURJPY is quite interesting.
How to Blow Up a Hedge Fund
It's crazy, but hedge fund managers still blow up their funds. "It's different this time," isn't the only thing that we read. It seems that risk management is still a concept that all of us could learn more about, including fund managers and traders like you and me too. I don't think it's possible to spend too much time learning about risk management. It's all I talk about when I speak publicly (and has been for a couple of years) because I believe that if you can conquer risk management, you can do amazing things as a trader.
Here's an article from BusinessWeek about the blow up of two Bear Stearns hedge funds.
If you take the time to read this article, here are two questions I invite you to think about:
1. What if Cioffi had staged his entry into the CDOs? What if he had not leveraged himself so badly, but rather staged entries as CDOs went down in price, and instead of risking 100% of his funds, he only risked 5% at most? Okay, I get it that he was paid to make spectacular returns. I'm just asking what would be different. Hint: one thing that would be different is that he would still be in business, he would not be getting sued, and he probably would not be heading to jail.
2. What if Cioffi had taken the big positions that he did (forget about #1 above) but, instead of staying in the positions, he had just gotten out?
3. What if Cioffi had admitted that no one is very good at predicting the market, and just bought way, way out of the money options on CDOs that would make money on HUGE breakouts in either direction? That would have cost money in the short term but not as much as what his eventual strategy cost him.
Understanding the Federal Reserve
A good post is here from the folks at CurrencyTrading.net about interpreting what the Fed says in their statements. If you have ever scratched your head and wondered, "What in the world does that mean?" when you see a statement from the Federal Reserve, this post is for you.
Chopping off the ARMs?
A friend and trader sent me a table of mortgages set to be reset (interest rate adjusted higher) over the next year or so.
Here's the table. The numbers you see are billions. With a B.
I think part of the bailout that the Fed could orchestrate, could include "encouraging" mortgage firms to refi people out of some of these really bad (read: expensive) loans, even if such people are not really credit worthy of a refi. Maybe the Fed lowers interest rates to make this more attractive. But if all these reset, without any intervention, it is going to get ugly.
And maybe it should get ugly. There is an argument to be made against bailing out everyone. We'll talk about that soon.
What if the Fed Does ...
1. If the fed raises rates, that will totally shock the market and the dollar will skyrocket.
2. If the fed cuts rates, no one will think it is a big fat hairy deal.
3. If the fed cuts rates and says "we think the economy sucks" in the statement, the EUR/USD is going to 1.4000 in the next week after.
4. If the fed does not cut rates, Larry Kudlow is going to have a heart attack.
2. If the fed cuts rates, no one will think it is a big fat hairy deal.
3. If the fed cuts rates and says "we think the economy sucks" in the statement, the EUR/USD is going to 1.4000 in the next week after.
4. If the fed does not cut rates, Larry Kudlow is going to have a heart attack.
The Real Fed Funds Rate
The U.S. economy lost 4,000 jobs in August, and that sent the US Dollar reeling against most major currencies on Friday, as traders began to believe that a US interest rate cut would be a lock at the Fed's next meeting in a week.
What's even more interesting to me is that, when poking around the Bloomberg terminal, I looked at the effective Federal Funds rate, which is the base rate which the Fed sets for banks to make overnight loans to each other, and which serves as a benchmark rate for the US economy. This is the rate which Bernanke and crew will make a decision about on September 18. This is the rate that everyone talks about when they talk about the Fed "cutting" or "raising" rates. Anyway, the effective rate, the rate which the Fed is already setting for these overnight loans, already reflects a 25 basis point cut in the rate. Meaning, practically speaking, the Fed has already cut rates. Here's a screen shot that shows, in column "EFF", the actual effective US Fed Funds rate. And this only includes up to September 6. You can click on the image to get a larger version:
If all of this makes no sense to you, keep this in mind: all this talk about what the Fed is going to do, is probably not as constructive as looking at what the Fed has already done.
What's more, speaking economically here, the Fed Funds Futures contracts, traded through the Chicago Board of Trade, are showing a 128% chance of a rate cut at the Fed's next meeting. How it's possible to have a 128% chance of something happening is beyond me, although I can think of a few things which would qualify:
1. Falling asleep during a Presidential debate;
2. Me forgetting to take out the trash before I left for California (this is true);
3. Me hoping that In-N-Out Burger is open when I arrive in California tonight.
All of these things have a 128% chance of happening.
What's Driving the Currency Markets Now?
A question from yesterday's webinar (a web-based presentation that we do with charts and stuff):
Rob, what's driving the currency markets right now? What will get the market moving again?
Well, for the last week or so (at least until yesterday), it appeared that nothing at all was driving the market. It seemed that everything had calmed down so much that we were not getting much movement at all. Especially in the JPY-related currency pairs there seems to have been a major stalling point.
This often happens after giant trending moves -- we get a Phoenix Phase (what I call a trend) and then we slip into the Yuma Phase (what I call a garbage/directionless market) for what seems like an eternity. And that's exactly what the EUR/JPY, the GBP/JPY, the AUD/JPY, the CAD/JPY, and the CHF/JPY have been doing. Just sort of larfing around.
What will get the market moving again is more news about interest rates. Here's an overview:
1. The European Central Bank. Stayed pat on their base interest rate at 4%, called the, and I am not making this up, "Main Refinancing Operations Variable Rate." Yesterday's decision might have come as a surprise to some, but here's what a member of the central bank council said yesterday: "We said we were in a process of [raising] adjusting interest rates and I've said that this process hasn't ended yet. Delayed doesn't mean abandoned." What he is saying is that the ECB could actually raise rates at a near-future meeting. The decision yesterday from the ECB sent the Euro moving a bit, finally. Next meeting: October 4.
2. Bank of England. The "Repo Rate" as they call it, stayed at 5.75% in yesterday's decision. The Bank of England also issued a statement that inflation could still be a worry, and that the impact of recent financial problems on the consumer were not yet ascertained. This, like the ECB, looks to be a statement that could even lead to another rate hike in the future. This got things moving a bit yesterday as well. Next meeting: October 4.
3. Bank of Canada. On Wednesday, kept it's "Overnight Rate" steady at 4.5%. Next meeting: October 16.
The big upcoming meetings are:
1. The US Fed. The big question on everyone's mind is whether the Fed is going to lower the base interest rate, the "Fed Funds Rate" to 5%. Of 111 economists surveyed by Bloomberg, the average prediction for the rate at the next meeting is 5%. If the rate is lowered, it's absolutely reasonable to expect a ton of movement in the currency markets -- 200 pip moves within 24 hours, or even less. Next meeting: September 18.
2. The Bank of Japan. The carry trade has been in such turmoil lately that all eyes will be on the Bank of Japan on September 19, when the bank meets to discuss the "Discount Rate", which is currently set to just under .5%. There had been consensus that the Bank would be raising interest rates further this year, but according to one major investment bank, the odds of an increase at the next meeting have fallen to 4%. That's pretty low. If the interest rate is kept low, the carry trade could get a temporary (2-3 month) boost, and we could see the GBP/JPY jump back up into the 240's and the EUR/JPY jump back up into the 160's.
Interest rates, right now, seem to be dominating the conversation and driving the markets. And movement can occur after a major economic report that is strongly tied to inflation (because interest rates are set by most central banks to maintain growth in the economy and contain inflation), or on newly revealed problems in the financial markets, because these economic events lead to further speculation about what the central banks are going to do.
Continue reading "What's Driving the Currency Markets Now?" »
What To Do In Times Like These
Currencies all over the world have been more volatile this week than in any week in the last year, or two years, or three years. A 900 pip daily candle this week was a good sign that people were just simply freaking out.
If you stop and think for a moment, and I know you're the "stop and think" sort of person, you'll remember that right now the interest rate picture around the world looks like this:
Bank of Canada 4.50%
Bank of England 5.75%
European Central Bank 4%
Federal Reserve 5.25%
Swiss National Bank 2.5%
Reserve Bank of Australia 6.5%
Reserve Bank of New Zealand 8.25%
Now compare ANY of those numbers to:
Bank of Japan 0.5%
What's happening right now is that people are selling off high interest currencies and buying the world's lowest interest rate currency. Panic can only take this down so far; that's why this morning we saw the GBP/JPY rise 800 pips off its lows in just a matter of 6 hours. That's why we saw the EUR/JPY jump up 300 pips this morning in 3 hours.
At times like this there are pie in the sky traders who start believing that we'll see this sort of activity forever now, and a month from now they'll still be taking trades and hoping for 900 pip moves. Please keep in mind that this sort of movement is unusual, it won't last forever, and you shouldn't be altering your rules now to try to get rich quick.
In the near term, can expect more volatile movement up and down. We can expect a lot of uncertainty. We can also expect that we'll see disruption not just in the currency markets, but in all markets. So what do we do?
First of all, we never risk more than a small fraction of our account on a single trade. If you risk 1% or less per trade, and you stay true to your stops, none of this stuff matters. If, on the other hand, you start risking a lot, thinking that you are going to make a fortune in the short term, you are going to go broke. You will be, in other words, gambling.
Second, we're going to keep trading our system. Our rules don't change. Maybe the volatility increases. But soon enough people will get in touch with their senses, things will calm down, and we'll still be trading our rules, still be risking 1% or less per trade, and still happy.
Google and the Carry Trade
I talked the other day about Boris Schlossberg's presentation at the FXCM Expo in Dallas. He discussed the fact that the EUR/JPY might be a vehicle for understanding the global appetite for risk: as the EUR/JPY falls, it shows a reduction in the global risk appetite. Here is what the global risk appetite looked like yesterday:
Then, yesterday, Google (GOOG) disappointed on its earnings. Here is a side-by-side chart of Google and the EUR/JPY from this morning. You can click on the chart to enlarge it:
So, is Google now a good proxy for understanding global aversion to risk? It seems to me that the price of Google's stock probably does a fine job representing the hopes, aspirations, and delusional get-rich-quick mentality of not only your average retail investor, but of hedge funds too.
I think it's fair to say that when the world's investors start running away from risk (whether it's the carry trade or Google, or Webvan and Pets.com, or Tulips, for that matter), they run away from all the risk. They don't just sell their shares of Google. They start selling their shares of everything that has been bubbly, frothy, overpriced and overhyped.
Today might not be the day for the total collapse of the carry trade and Internet economy 2.0. But I'm gonna keep my eye on GOOG just in case.
The Raging Rupee
Click here to read one of the most interesting economics blog entries I've seen this year. Justin Fox, the Curious Capitalist, mentions that Simon Robinson's article about the Indian Rupee just isn't getting the attention it deserves. Click here to read Simon's article in full.
Justin's blog entry and the article about the Rupee started a wave of thinking: it's one thing to say that certain blowhard Congressmen are focusing too much of their attention in the wrong direction. It's another thing to ask: where am I focusing all of my attention? Am I spending time on the right stuff?
It seems that lately I am getting more and more email from people who are on the verge of trading success but who are giving up when they realize that they are going to have to spend another month or two backtesting, failing, trying again, testing more, keeping records of their results, getting feedback on those results, and so on. This type of investment of time just isn't what they are willing to give. So what do they do? They focus on other systems that haven't been tested, which offer a seemingly easier path to wealth.
The result? They end up very unhappy with their trading performance, having lost money, and having wasted time trading something that they hadn't spent the time to test.
What are you obsessed about? What are you focused on in your own development as a trader?
Bernanke's Testimony
Bernanke testified to the House Financial Services Committee today. Here is an excerpt:
AIDE (whispering): Say something about subprime, just say the word 'subprime'.
CONGRESSMAN [LOUDLY QUESTIONING BERNANKE]: Mmmmm, mmmm. Prime beef. Love it.
BERNANKE:
AIDE (whispering anxiously): Ok. That didn't work. Try this: mention something about the Dow Jones and the bubble market.
CONGRESSMAN [GETTING LOUDER]: And what do you have to say about Star Jones looking like a huge bubble?
BERNANKE: Do you mean Dow Jones?
CONGRESSMAN [NOW RED-FACED]: I'll do the questioning around here!
No Roll on Ocean Day
Walter Peters, who might be kind enough to let me publish his pink-shirt theory in this space some day, wrote me today and we were wondering why there was no rollover payments (or charges) for the JPY-backed pairs today:
Then we both remembered -- thanks to a quick chat with FXCM -- hthat Monday (the 16th) is a Japanese Holiday. In fact, it's Ocean Day. This means that FXCM and some other dealers paid quadruple interest on Wednesday and no interest today.
"The Yen Will Be a Dog"
From an International Herald Tribune article today by the always insightful Bo Nielsen:
"We're going to see carry trades for a long time," Gabriel de Kock, chief currency economist at Citigroup Global Markets in New York, said at a foreign exchange conference in Singapore. "The yen will be a dog."
If the Yen will be a dog, what does that make the Pound?
The Carry Trade and the Movie House
The carry trade can be viewed as a horde of hedge fund managers, crowded into a movie house. Here are the films playing in the double feature:
1. Raging Bull
2. Titanic
So you've got these hedge fund managers -- hundreds of them, sitting all over the place, on each other's laps, in the hallways, standing in the exit, hanging from the balconies, all so that they can get a view of the first movie. The movie house acts out of pure self interest and greed, and sells more tickets than it has seats. The more crowded the movie house becomes, the higher the price of admission.
During the intermission, someone yells 'fire!' from within the movie house. In fact, all they have to say is 'FFFF' -- just the sound of the first letter in the word fire, and all of the sudden, there is mass panic and everyone is heading for the door. Oh, I forgot to mention, there is only one exit out of the movie house, and it happens to be a hole the size of a warship porthole. And there is a Japanese banker standing at the exit, charging an exhorbitant fee just for the right to get out. He doesn't move aside when someone yells fire or any other word.
Every time someone yells fire, there is no way for everyone to get out. Pretty soon, the hedge fund managers realize that there really hasn't been any fire, just the false threat of one. So after a while, they stop panicking and they just get comfortable (as much as possible) so that they can enjoy the second feature.
They know the story of the Titanic. They know how it ends. But they stay anyway.
NOTE: Thanks to Commander Rob of the HMS Somerset for the 'FFFF'. And he's got a great blog.
China and the Dollar
James Fallows, in a brilliant article for the magazine Atlantic Monthly (online access for subscribers only, which is why I'm going to post a lengthy quote below), discusses the manufacturing monster that China has become. As a part of the piece, he also mentions the dollar quandry:
Everyone understands that that in the short run China's handling of its [dollar] reserves has been a convenience to the United States. By placing more than $1 trillion in U.S. stock and bond markets, it has propped up the U.S. economy. Asset prices are higher than they would be otherwise be; interest rates are lower ...Everyone also understands that in the long run China must change this policy. Its own people need too many things -- schools, hospitals, railroads -- for it to keep sending its profits to America. It won't forever sink its savings into a currency, the dollar, virtually guaranteed to keep falling against the RMB. This year the central government created a commission to consider the right long-term use for China's reserves. No one expects the recommendation to be: Keep buying dollars.
What's amazing to me is that there is so much talk about this one issue -- China's reserves and its eventual diversification of those reserves -- without any real understanding (ability to predict) of what the heck is going to happen if and when this diversification occurs. Here are just a few scenarios:
1. The Dollar Vomits: In this scenario, the US dollar gets whacked big time because the Chinese call up Goldman, Bear, Morgan, and everyone else, and they start selling off their dollar-denominated assets. The classic law of supply and demand says that if someone wants to sell $1 trillion of anything on the world financial markets, that "anything" is going to dive in value. It's not just the fact that there will be a glut of dollars (thus they'll be valued lower), but it's also the fact that this massive sell-off triggers a wave of buying from other people who don't want to be the last sucker at the poker table.
2. The US Fed Raises Interest Rates: China starts selling, and in order to bolster demand for US debt, Bernanke & Co. raise interest rates to attract buyers. This increased interest rate means that US debt will pay attractive returns, and thus the US can still finance it's wild descent into debtors hell (so that the US government can do important things like study the effect of a vegetarian diet on hogs, study why criminals want to escape from jail, and send man back to the moon even though it's already been done).
These aren't the only two scenarios. But this post is already long and I'll continue it later.
I do want to mention that in either scenario, either #1 or #2, the US economy still goes into the toilet. Under #1, the dollar becomes worth less, and inflation skyrockets and families can't afford such luxuries as food and shelter; additionally, that family's retirement portfolio (US stocks) blows up. Under #2, increased interest rates halt the lending that spurs the economic development that we've seen so much of over the last few years.
Market Theory vs. Market Reality
David over at Dismally.com (an excellent blog worth bookmarking) had a great post a couple of weeks ago about the US Dollar. I want to share it with you. Click here to read the post.
What I love about the post is in the very first paragraph. He comments on a contact he has, "The Dealer," and says this:
I like chatting with this guy. He never tells me market theories, but he will tell me what players are doing. Size, timing, targets and such. It's incredibly interesting information in its own right, regardless of my own market take.
It's one thing to have your own, well-studied opinions about the market. But theories only go so far. The other (major) question is always: what is actually happening? What is really going on?
The Food and Energy "Crisis"
I've been thinking about CPI today (yes, I lead a thrilling life). Let's look at the chart again. This time, take a look at the red line (which is CPI including food and energy costs) and the blue line (which does not include these volatile elements:
There is all kinds of talk (and news reports, and windbag congressmen) who complain that "real" inflation is higher because our energy costs are skyrocketing. Putting aside for a moment that people in the US still pay less for gas than most people in the world, consider that the red line and the blue line on that chart are not really that far apart.
What does that mean?
It means that "real" inflation, which would include increases in food and energy costs, is not really too different than core inflation. It's another case of much-ado-about-nothing. The bigger story is, in my opinion, the story about what wages have been doing over this period of time.
Little Bit of Inflation Goes a Long Way
Take a quick look at the graph below:
From 1991 through 2007, we've seen CPI bounce around between 4% and a bit more than 1%. That's 16 years and only for a very brief period of time (in recent years) did we see the range broken. Consider this for a moment: look at all the news stories, all the business television reporting hours, all the speculation, all the hullabaloo, the much-ado-about nothing...all in the name of predicting and hyping up the Consumer Price Index. Think of the money involved in just publishing to the world all of this "news".
Now think about all the billions, even trillions, of dollars traded back and forth solely on the basis of this one economic indicator which, in the end, hasn't moved outside of a narrow range for 16 years.
Trading is about stories. It's about belief systems and emotion and hype. It's not about rock-solid facts. All those billions of dollars won and lost on interest rate / inflation speculation, when in reality the real CPI hasn't moved much at all. It was a non-story, really, for the last 16 years. But this non-story can create and destroy billions of dollars in wealth.
NOTE: I understand that small fluctuations in interest rates cause interest-rate based financial products to move a lot. But think about why those products are moving -- they're moving because of the stories behind the market, the belief systems, the hype.
Continue reading "Little Bit of Inflation Goes a Long Way" »
Carry Trade Resources 101
Some of you aren't familiar with the basics of the carry trade. Here are some links below that will help you.
1. Carry Trade Definition. This is an article from Investopedia that really lays it out simply.
2. US Stocks and the Carry Trade. How they are (and are not) correlated. One of Boris Schlossberg's finest articles.
3. Wikipedia on the Carry Trade. Another great basic overview.
4. The Trade of the Decade. I don't know Nick from a sack of coal, I have never met him and I am not familiar with anything that he sells, teaches, or sends out. But I do like what he wrote in this article (especially about how big the carry trade might be).
Flavor of the Week: Bond Yields
Economic "themes" come and go. A few times a year, the market as a whole fixates on:
1. A political issue (ratification of the Euro Constitution);
2. An economic issue (the carry trade);
3. A global stability issue (Iraq war);
And then runs with it. A matter as simple as US bonds having a bad day (or couple of days) can spring to life a thousand news stories simultaneously and then, all of the sudden, the theme has been born and it grows into a beast so strong that no trader can avoid thinking about it. Well, that's what is happening right now with US bond yields.
The bond yield matter is connected to the carry trade, which is connected to currency rates, which is connected to you. And as long as traders believe it's important, you're going to see the issue become a self-fulfilling prophecy. To boil it down to the simplest possible:
1. Investors are now worried that US interest rates are going to rise (esp. the 10 year treasury note). 2. This is causing disruption in the US equities markets. 3. This is causing news stories about both of the above, and a TON of speculation about what will happen next.
What I really want to say is that these self-perpetuating stories just take on a life of their own, and they become dominant themes because a mass of people all latch on. Traders want something to focus on -- a story, a theme, a reason for their trading -- and they'll let just about anything remotely reasonable fill the space. I'm not saying that traders are irrational, but I am saying that often they need a story or a reason in order to justify what they want to do or what they were going to do anyway.
And sometimes, they are irrational, and we start to see movement in the markets (notably, the currency markets) that just doesn't seem to make sense. Take, for instance, the recent plunge in the GBP/JPY from June 5th to the 8th. Everyone heading for the door on the carry trade, but why? The stories about the decline of the carry trade. Interest rates in the UK and in Japan didn't change at all during that period. But perceptions about what interest rates would do later this year caused a temporary panic.
In short, we're going to see a lot more of this over the course of the next few months. No one wants to be the last one out of the carry trade (they will lose so much in pip losses that they will end up negative on their trades, even counting the interest they've made).
Even the Mock Housing Market Stinks
You already knew that US Home Sales were falling. Here's proof in case you needed it:
That chart comes from the awesome Briefing.com Website.
But now the Wall Street Journal is reporting that Macy's was going to build 3,000 square foot "mock homes" inside some of their department stores, to showcase Martha Stewart products. That plan is scrapped, as the US mock-home sales have apparently eased off. Or the US mock-home buyer is having trouble getting a mock-home loan.
If there's any sign that the housing market was a bit on the bubble-side, this would be it.
The story about the mock-homes was brought to my attention when reading the always-informative MarketBeat blog from David Gaffen of the Wall Street Journal. In my opinion, that blog is worth the price of getting an online subscription to the journal. You can click here to read that blog:
http://blogs.wsj.com/marketbeat/
Now, how do we bring this full circle and apply it to the currency markets? I think that we've got a couple of things going on right now that are going to affect the US Dollar:
1. The US Economy is slowing down.
2. US Inflation isn't necessarily tamed.
If rates continue to rise (and there is now nearly no chance that the Fed will cut rates in 2007, and may even have to raise rates. Maybe I'm in the minority in suggesting this, but inflation hasn't been beaten yet. Even if the economy is slowing. Check out the PCE Deflator, which is the Fed's preferred measure of inflation:
Just look at the part of the curve from January 2003 to the present. It's not falling; it's obviously rising. In fact, it's coming up off a bottom from January 1999.
If rates continue to rise, even one more time, then the US Economy is going to take a fairly large hit. I suspect the Dow would fall far enough to eliminate any gains this year. It would put a lot of focus on the carry trade again -- especially if US rates are up (or staying up) while JPY rates continue to stay low and hold firm.
Boris on CNBC.com
Boris Schlossberg appeared on CNBC.com yesterday and had some interesting things to say. He always does. One smart dude, I tell you!
Here's the video:
http://www.cnbc.com/id/15840232?video=152590907
If you are not able to see the video, here is what you should do:
1. Take a deep breath, assume the lotus position, and think about your spleen. 2. Visit CNBC.com and type "FOMC Boris Schlossberg" into a search box.
The Pants Down Reversal?
The major pairs (except the USD/CAD) zoomed out of control today on the Non Farm Payroll report. We saw a big gain in the EUR and GBP, in the CHF, and especially in the CHF. But can this be sustained? I am not sure -- I think we need to pay attention to the fact that we've had a 1,000 pip runup in the GBP/USD alone in the last three weeks.
It's time for at least a bit of a reversal. It does not have to be a huge one, but we have a perfect opportunity next week to see one:
1. Ben Bernanke and the recently discredited Fed are going to have to prove that they are the real deal when they make their interest rate hike on Wednesday May 10. But that's not all.
Interest Rate Confusion?
Today the US Federal Reserve, in a totally predictable move if we all thought about it for 3 seconds, raised short term interest rates by 25 basis points. They also said that economic expansion in the United States appears to be solid, and that at the same time long term inflation worries are contained. However, they specifically pointed out that they are not necessarily done with rate hikes, and that energy prices could lead to inflation.
The fed funds rate now stands at 4.5%. It appears that it could get as high as 5.0% now.
The problem with the statement, for traders, is that the Fed is saying again that, “In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.”
What this means is that every major economic report (including this week’s ISM report tomorrow and the Non Farm Payroll report on Friday) are going to have a big effect on the USD. News will cause beastly movements in the major currencies against the USD. Especially economic reports that show actual numbers that are significantly different than the expected numbers. This causes lots of back and forth movement. This is frustrating for many of you who enjoyed trading in trends for the last 3 years.
During this time we need to be aware that the major currency pairs could trade in a range – all the way through March of this year. And it also means that the eyes of the world will be waiting to hear what the new Chairman of the Fed, Benjamin “Watch Me Single-Handedly Blow Up the U.S. Economy” Bernanke will have to say when he chairs his first meeting in March.
FOMC Statement | Jan 31, 2006
This is what I think the statement will say when the committee releases its decision at the January 31 meeting:
The Federal Open Market Committee decided today to raise its target for the federal funds rate by 2,500 basis points to 29 percent. We also sent $1.5 Trillion into the US money supply, so the increase won’t matter anyway.
Despite elevated milk prices and the fact that Bree on Desperate Housewives is on drinking binge, the expansion in economic activity in Turkmenistan appears solid. Core inflation has stayed relatively low in recent months, unless you happen to have bought any gasoline or ever turned on the heating in your house. Longer-term inflation expectations remain contained; at least that’s what our imaginary friend Aloysius Snuffleupagus says. Nevertheless, our ridiculous increases in the M3 money supply have the potential to add to inflation pressures.
The Committee is wondering where Alan went. If anyone sees him, will they let him know that we had a meeting today and he didn’t show up? We think that some further measured policy firming is likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance, but we’re not sure without Alan here. In any event, the Committee will respond to changes in economic prospects by continuing to print US Dollars in enormous quantities. In March, we’ll stop publishing information about the broad US money supply so we can keep from you the fact that we are creating huge pools of liquidity to prevent a recession, but all this is going to do is create massive inflation. And there is not a damned thing that you can do about it.
Except, of course, buy gold.
Housing Boom to End in the U.S.?
The housing numbers are all the buzz on trading floors. This morning traders are eagerly awaiting the sales numbers for new homes in the U.S. Usually this is not a huge number -- but lately it has taken on more and more importance. Here's why:
FOMC: Rate Hikes to End?
I just finished reading the FOMC minutes from the November 1 meeting, which are available here.
It appears that some Fed Governors are fearful that the rate hikes may go too far. That seems quite dovish, when we all had the opinion that these rate hikes might last forever. To be honest, the Fed sort of lulled us all into complacency and traders (especially the big money traders) were betting on rate hikes as high as 5% and perhaps 5.5%. That seems less likely now.
ECB Rate Hike Coming?
Claude Trichet, exotic dancer and European Central Bank President, signaled today that this time (really) he means business about raising the eurozone interest rate 25 basis points to 2.25%. Here is a recent photo of him, taken when he spontaneously broke out into a 50-Cent rap cover at a recent interest rate meeting.
This morning, he said:
“After two years and a half of maintaining interest rates at a level that is exceptionally and historically low, I consider that the Governing Council is ready to take the decision to move interest rates and modestly augment the present level of intervention rates in order to take into account the level of risks to price stability.”
The prospect of a rate hike sent the EUR flying upward -- see the chart below:
Dow Jones Trendline Update
The Dow Jones Industrial Average seemed this week that it was prime and ready for a trendline wacking. Here is the chart (click on it to make it bigger):
Bad US Trade = Good US Dollar?
The US Trade Deficit widened 11% to $66 Billion in September. So why did the US Dollar make a bit run upward right after the report was released? Here is the chart -- look at how the deficit keeps rising. Click on the chart to make it bigger.
Oil update
The value of the CAD, as I talked about today, is heavily influenced by the price of oil and by the suspension of hockey, and by the popularity of 5-pin bowling, which apparently was invented in Canada and is the most boring sport in the world after fishing.
Below is a weekly Light Crude chart. Click on it to make it bigger.
Canucks, Oil, Hockey, and the Loonie
Oil could be taking a dip. Canada's government is in a bit of disarray right now (with a possible no confidence vote for the government on the horizon). Hockey is back, so Canadians will be paying less attention to the economy and more attention to assists and GPG. This means that the CAD could weaken, despite the fact that Canada's short term interest rate is on the rise. Short term problems for the CAD means it could continue to weaken. Long term, as long as the interest rate continues to rise (and it should), the CAD will remain somewhat stable. But in the near term, it's poised to give back some gains.
Here is a chart that explains it all:
Gold update
As you know, I've been watching gold lately. The chart below shows that we're getting a nice correction right now. The blue trendline is going to be support -- but I think that Gold can break through that support and fall all the way to the 200-day Simple Moving Average. I'm not buying until that happens. Click on the image below for a larger version.
There are two reasons I think Gold can get down to 430 or so.
There are two reasons I think Gold can get down to 430 or so.
Subscribe to the blog |
Sponsored Links |
|
|
