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Inflation - we MUST achieve it Print
Written by Site admin   
Monday, 04 November 2019 12:44

Inflation "we MUST achieve 2%" (3-4-5-6%....)

 Stock markets pop first - Gold and Silver next.

 

Last Thursday, the day after the US Federal Reserve shaved interest rates again, this was the result...

Lower rates and more liquidity, what more does a stock market need?

The Dow Jones 30 hit a new all time high with the other major stock indexes snapping at it's heals.

And the fundamentals?

Technicals are great, I would never trade without them, but when the charts align with current Trumponomics, and recent history, it's a perfect combination.

Powell confirmed it all this week. On Wednesday the FOMC agreed with market expectations and trimmed another 1/4 point, bringing US rates to 1.75%. Stating "we must achieve 2% inflation", he also said "we see no risk of inflation...running away".

At the press conference, Fox news asked Powell, "When are rates likely to go back up?".

Powell replied, "We just touched 2% for a couple of months then it dropped back (to 1.8%). We would need to see a really significant move up in inflation, that's persistent, before raising rates"

Inflation is the only tool left to keep the show on the road.

QE was designed to reduce interest rates to bring back growth, save the banks and fuel the feel-good factor of rising house prices to get us all spending again.

It didn't work as designed.

The massive increase in QE and debt (it's now $23trln in the US) saved the banks short term, but low interest rates resulted in low profits, strangling them over the long term.

QE did achieve inflation in real estate and stock markets, but it increased housing costs. That killed off the feel good factor.

Consumers struggled with the cost of living rising faster than income. The already rich get richer as everyone else gets poorer....

Then the US federal reserve decided to attempt normalisation. QE was wound down and tapering began. Regrettably, that resulted in the next banking crisis.

Demand for the US$ in world trade is immense. Despite the global down turn, trade needs more and more dollars just when the Fed was cutting the supply with it's QE tapering.

This summer saw several liquidity problems in the interbank market. Banks wouldn't or couldn't lend to each other, they didn't have access to enough dollars.

Consequently the Fed stepped in, increased liquidity and effectively restarted QE by buying T Bills instead of bonds.

Non Farm payrolls

The numbers came out much better than expected +128k, instead of an expected +90k.

I'm sure these figures are never massaged, but does this set up the expectation that the US economy is still growing and confident?

Powell's Fed stance on inflation suggests they are ready to let inflation rip. The last few rate cuts are the fuel. But it'll be stagflation - plenty of inflation but no real growth.

Problem solved, inflate away QE and worry about real inflation later, much later.

Which markets to trade...

Short term, stock markets love low interest rates and more QE. They are already popping to new all time highs.

These are also almost perfect conditions for Gold and Silver to soar.

Almost perfect. It'll be helped along when the US$ weakens with these interest rate cuts. Right now the Forex market is shrugging off a dollar crisis, but give it time to catch on to even lower interest rates that are certain follow.

Also the unexpected - perhaps there will be a major monetary crisis that hits stocks and bonds, or tensions with the Russians or Chinese will go beyond a war of words.

Once (if) inflation rises above 2% for a few months, precious metals will be well on their way north. Gold currently hovering at $1,500, $2,000 could be it's first target. .

Silver is just $18 with the potential to run beyond its 1980 and 2011 highs of around $50. Could we see these levels again?

Of course we could, it's happened twice before.

Kind regards

P.S. Don't miss this deal, join up to a Traders Class subscription and get any one of our full courses thrown in! Details here.

 

 
Silver breaks out Print
Written by Site admin   
Friday, 25 October 2019 09:05

 

Silver makes it's move.

It's been a while waiting for this month long consolidation to mature.

Silverfri25thoct19

All the Universal Trader indicators are pointing in the same direction and price action is following the rules for this to run into a major fifth wave.

 

 

 
It Started with a Kiss - three in fact.... Print
Written by Site admin   
Wednesday, 11 September 2019 10:16

It started with a kiss - three in fact.....

Here we are again.

Those Westminster politicos have left us in yet another muddle, only more so. And Boris? it's a re-run of Theresa.

Off he popped to Eire then it's across to the continent. He's just what Barnier and crew wanted: A ham-strung, cornered British PM who, it seems, can now only grovel for one or two crumbs of improvement to Theresa's deal.

Leaving all that idiocy to one side, this week we have had some amazingly good economic news.

On Monday GDP improved by 0.3%, better than the 0.1% the market expected. Manufacturing production was also better at 0.3% against an expectation of -0.3%!

Today, Tuesday, we are treated to better than expected unemployment numbers and an average earnings increase. Mark Carney, talking this morning, seemed less concerned about the UK than with the slow down in global trade.

So what of the UK stock market?

Whilst the GBP has been rallying the FTSE100 has moved a little, but is lagging behind US and European stock markets.

Is now the time to be wading in?

The waves are suggesting a substantial move is due. A series of down waves has ended with a flat and three kisses.

The new up wave has broken above the last major lower high, a good sign. A possible corrective wave two will have completed if the Footsie can move above Monday's high. That would be the start of the money wave, W3.

As with most technical patterns, a triple bottom fails as many times as it leads to a reversal. But what this chart is telling us is that the FTSE is not yet ready to collapse - as long as it stays above the red line!

Mark Carney stated the obvious during his talk: Once the Brexit outcome is settled, major moves and investment is likely, given the last three years of uncertainty. The big question is, how much longer will the uncertainty last?

Perhaps we are about to see investors not waiting for certainty any longer.

 
Want to See What's Next for the Economy? Try This.... Print
Written by Site admin   
Sunday, 28 July 2019 07:49

Want to See What's Next for the Economy? Try This....

 

On Monday 15th July, US stock markets made a new all time high. Does this also mean that the US economy is doing just fine?

The US Federal Reserve believe so despite the naysayers who so often tell us the 'real' economy is about to collapse into recession. Next Wednesday, the last day of July, is Fed day when many commentators believe it is highly likely there will be an interest rate reversal.

We've had a stream of quarter point rises. For some, the expectation is now for at least a quarter point cut, maybe more. Will this be enough to save off recession and keep the market buzzing to new highs?

Read on for the Socionomic view from Elliott Wave International...

Don't listen to the naysayers -- there IS a way to forecast the general health of the economy. This method has repeatedly proven itself.

Yes, you can anticipate the likelihood of a recession, even a depression -- or, conversely, when major economic measures -- like jobs -- will be robust.

That surefire way is the performance of the stock market.

That's right, despite the widespread belief that the economy drives the stock market, it's the stock market which leads the economy. Why not the other way around? Because the economy is a slow boat.

Read more...
 
Stocks up and away - now China is 'back on track' Print
Written by Site admin   
Sunday, 30 June 2019 08:53

The mood music from the G20 has just made a dramatic change.

Trump's tweets of the last weeks and months has been full of confrontation but all that switched 180 degrees this weekend.

It's mainly been how he will add more tariffs on Chinese inports into the USA and the stock market got a severe case of the jitters, despite Fed chair Powell moving to a dovish stance on interest rates.

The news this weekend has changed all that. Trump folds on Huawei and has agreed to re-start talks.

The market will love these headlines and, as the chart shows, started it's next bull wave on Friday. Wave traders have been ready, watching the wave count followed by an a-b-c. This market is not collapsing.

Monday is 1st July, it's going to be quite a week and month!

dax1stjuly19

 
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From the blog

It Started with a Kiss - three in fact....

It started with a kiss - three in fact.....

Here we are again.

Those Westminster politicos have left us in yet another muddle, only more so. And Boris? it's a re-run of Theresa.

Off he popped to Eire then it's across to the continent. He's just what Barnier and crew wanted: A ham-strung, cornered British PM who, it seems, can now only grovel for one or two crumbs of improvement to Theresa's deal.

Leaving all that idiocy to one side, this week we have had some amazingly good economic news.

On Monday GDP improved by 0.3%, better than the 0.1% the market expected. Manufacturing production was also better at 0.3% against an expectation of -0.3%!

Today, Tuesday, we are treated to better than expected unemployment numbers and an average earnings increase. Mark Carney, talking this morning, seemed less concerned about the UK than with the slow down in global trade.

So what of the UK stock market?

Whilst the GBP has been rallying the FTSE100 has moved a little, but is lagging behind US and European stock markets.

Is now the time to be wading in?

The waves are suggesting a substantial move is due. A series of down waves has ended with a flat and three kisses.

The new up wave has broken above the last major lower high, a good sign. A possible corrective wave two will have completed if the Footsie can move above Monday's high. That would be the start of the money wave, W3.

As with most technical patterns, a triple bottom fails as many times as it leads to a reversal. But what this chart is telling us is that the FTSE is not yet ready to collapse - as long as it stays above the red line!

Mark Carney stated the obvious during his talk: Once the Brexit outcome is settled, major moves and investment is likely, given the last three years of uncertainty. The big question is, how much longer will the uncertainty last?

Perhaps we are about to see investors not waiting for certainty any longer.

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