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Another great trade & It's the interest rate differential Print
Written by Site admin   
Wednesday, 06 March 2019 19:21

Another great trade and a special deal for you below...

At the recent London Forex Show I talked about some of the key issues that impact and move the major currencies. Amongst these were, will US interest rates keep rising and will the US Dollar strengthen or weaken.

The talking heads have told us all about how the US$ is doomed. It's the trillions of US debt they say, and expectations of a US recession kicking off this year.

And then the big one is the global petro dollar decline. China and Russia can now by-pass the US$ strangle hold on world energy markets and trade in Renimbi, Roubles and Euro's.

And then there is the Donald. Whenever he has an audience he tells us that the "gentleman at the fed likes a strong dollar". Clearly, Trump wants it to weaken to make US exports cheaper than the competition and keep 'his' stock market boom going.

The USDJPY just ignored the dollar doomsters...

Read more...
 
Australian Banks - Oh boy! Print
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It's gradually dawning on the Reserve Bank of Australia that they have a problem.

The big four Aussie banks are holding around 85% percent of all Aussie home mortages.

As worldwide interest rates were creeping up throughout 2018, repayment costs have increased at the same time as housing prices are falling back. No great problem for those who bought property a decade and more ago.

The problem is for those who invested in the last few years. Very soon a good many mortgages will be in negative equity. If, or when, mortgage defaults increase, bank capitalisations will tumble and it could become a spiral, starting slowly and then accelerating across the real estate, mortgage and banking sectors with the predictable effect on the Australian dollar.

 For a full assesment of the bind Ausralian banks are in, click and listen to this video from Chris at Casey Resaearch and Martin North of Digital Finance Analytics.

 
An excellent start to the New Year Print
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To say that confusion and division reign is something of an understatement!

Dare I mention the 'B' word? Very definitely not in polite company. It has the potential to reveal the rawest of emotional responses. Trump? Again, avoid anything other than the consensus view that he is most unlike any POTUS we have known before. Privately, we can perhaps attempt to debate with ourselves, if we have open minds, but these seem to be in short supply.

The markets are reflecting the mood with pundits taking their positions. Strong Dollar or weak Dollar? Collapsing stock market or no need to panic? Interest rates too high in the US or must they rise in the EU?

Certainty

The only thing we can be sure about is that the political and economic landscape has entered what may be a long period of major change. The certainty is most likely, ongoing uncertainty. Open minds are needed now more than ever.

A great start to the New Year

Despite the stock market tumble in December, Gold and Silver took off and stock markets are recovering for a great January so far. The US Dollar has now dropped back from the brink of plunging China into crisis. So, perhaps, armageddon and the 'everything' collapse will have to wait a while.

Consistency

TMEST also had a good start to the year. The chart of one of our favourite currency pairs, the CADCHF gave us a quick 126 pips and there could be more to come. It's not just currencies of course, we have also taken profits from the Gold and WTi Crude oil trend reversals.

This is one of TMEST's most consistent reversal patterns. The horizontal red lines picking out the entry and exit. The previous down trend ended with a break out, pull back and higher low, or BOPBHL pattern.

TMEST is a part of 'The KISS system of trading for life' that I will be presenting at the RTCT online summit, in February and at the Forex Show on Friday 22nd. No charge, sign up here.

 
Gold Silver Ratio Print
Written by Site admin   
Wednesday, 19 December 2018 18:15

Today is the Day & The Case for the Gold Silver Ratio

 

Will Christmas come early for the Donald? Will he get his demand of lower interest rates from Father Christmas Powell? Today is the day that could see a major reversal, or just the same old, same old.

A quick re-cap. The fed have made a couple of 0.25%, or 25 basis point, increases to the Fed funds interest rate this year. Signalled by the Fed, the market is fully expecting Wednesday the 19th December will bring the rate to 2.5%.

But. At his last announcement Fed chair Jerome Powell talked about rates which were just below the Neutral rate. Markets seem to have taken this to mean that today's rate increase, if it happens, will bring it to neutral, so no more rate increase will be signalled into 2019. Add in the Donald's insistence that any rate hike now is insane, we wait to see if it actually happens.

Either way, US dollar traders are in for some excitement and that just might include the precious metals and stock markets.

The case for Gold

This time last year all eyes were on BitCoin and the other 1400 or so Crypto's. These were the new Gold the hype merchants told us. Yes, the similarities were there all right. Gold has rocketed higher several times in a buyers frenzy to get in on the act. What makes it move?

Read more...
 
What's the Yield Curve Invertion? Print
Written by Site admin   

What's meant by the Inverting Yield Curve?

 

The blogosphere is full of the impending collapse of the Dow with some pundits talking of 14,000 in 2019, a modest 10,000 points lower. Right or wrong, the fuel that has kept stock markets forever bubbling, an endless wall of money and a strong economy, will eventually end. Is the yield curve telling us the economy is about to fall of a cliff?

Normality

Government and corporate bonds are issued with different maturities. The standard US bond is the 30 year, but there are many different maturities, typically 3, 5 and 10 year, etc. Some run for just a few months to maturity, whilst some whacky corporate bonds have been issued with maturities way out at 100 years!

Read more...
 
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From the blog

Next Wednesday, up they go again...

The consensus is the Federal Reserve, at it's June FOMC meeting Wednesday 13th, will confirm the next US interest rate increase, from 1.75 to 2%:

The consensus, 'dot' plot and forward guidance is as plain as day. But, today, the bond market just had a hissy fit...

The standard 30 year US T Bond has been tumbling down this year. Interest rates do the opposite of course, moving on up as bonds slide. But just look at the chart. The chart bottomed on May 18th, rallied then tumbled again, until today, June 7th.

The 4 hour chart shows a major key revesal day, lower early in the day then higher than yesterday. Key reversals (or the candle version, Bullish Engulfing) are one of the strongest one day signals in the market.

What does this mean?

Maybe nothing more than traders liquidating their previous short position profits, just in case something unexpected comes out of the Fed minutes.

Or - the market just got the idea the Fed will change it's mind and delay the increase. The dollar will tank and stock markets will soar even higher. Stranger things have happened, just when everyone least expect it.

 

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