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And Since Nobody Talks About The EURCHF...
From Nic Lenoir of ICAP
EURCHF has been making all time lows, and so it did get one meager headline on Bloomberg but it wasn't exactly the talk of the town. However, the attached chart shows that EURCHF selling off implies that something bad is brewing for sovereign bonds in Europe. The chart represents the EURCHF against the spread between the 2Y average sovereign yield (weighted by notional outstanding) and the 2Y EONIA which is 2Y compounded overnight rate. One can see fairly quickly that over the past couple 18 months one rarely goes without the other. Practically it just means that whenever money is flying out of Euro into Swiss Franc it's highly likely that people (the same people) are getting rid of their Eurozone sovereign bonds. This is not the widest divergence we have seen but the EURCHF is breaking out lower, and with reports that last week's purchases of Eurozone bonds by the ECB was the lowest since the beginning of November it is not crazy to expect renewed selling pressure to manifest shortly.
I have attached again my DXY chart. The 60-dma has been an excellent envelop for the price action over the last 2 years. The higher order envelop is the 200-dma, which we first tested and rejected at the end of November. There is a chance we correct again slightly to retest the 60-dma first (currently at 78.48) but after that it really looks like a beautiful bullish set-up and we shall pierce through the 200-dma and make a whole lot of carry traders very uncomfortable. Surely if we are to believe EURCHF that Eurozone bonds are about to get sold hard again shortly, it is easy to imagine the USD would rally on the back of that dynamic. Remember also that the new tea-party elected representatives are hitting Washington in January led yb Ron Paul and we can expect some much more sobering speech extracts than the taxcut and benefit extension bonanza we were served for the holidays.
I am very open to the idea of being wrong, but a lot of the markets I track point towards a strong USD. Surely we shall know with the moving averages turning. USDCAD could be a great indicator. The pair has been in a very narrow and narrowing range for over a year now. Closing below 1.00 on strong volumes in the market would probably send people covering or chasing it lower, but the 100-dma and 200-dma which have held as resistance on a close since August both within less than 1% upside break out levels are just one bad day for risk away...
Good luck trading,
Nic
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King dolare
Spritzer is crying in the corner.
Doubt it. Better to be on dry land than the ship that is sinking slower than the fastest sinking ship.
That is, Gold kicks the ass of all currencies, as well as all equity markets. Silver beats all commodities, and PM miners beat all commodity producers.
Sorry, but you lose :(
dltd
roger dollar. it will continue to be a tug of war between inflationary and deflationary forces until mr.market gives up on the US of A or the american public stands up.
http://unconstitutional.blogspot.com
What is going on with the Swiss? This is the second day this has been going on. I guess the gap between Switzerland (the ant) and the rest of Europe (the grasshopper) is becoming more acutely obvious.
Those with wealth say one thing and do another,quite obvious,as long as the sheeple don,t panic after realising whats going on and if they do in quantity the Gold and Silver will be long gone.
The doomers should sell gold after a nice run and buy cat, aig, lvs, ras, joy. Buy gold at 1,200 again and the miners after a nice blowtorching.
CNBC now throwing stones at gold.
The Smailes kid now goes by what CNBC says? Low level troll.
He really lives up (down?) to the horrible kid from Caddyshack (great movie). $50 bucks the Smailes kid picks his nose and eats it.
Spalding: I wanna hamburger, I wanna hotdog, I wanna...
Judge Smales (Roaring): YOU'LL GET NOTHING AND LIKE IT!
Looks like nobody's talking about the EURCHF...
Only thing that matters in Banana USA is how many $Billions The Bernank will chuck at the BS markets tomorrow.
nobody gives a shit
BTW - as this spread blows out, this is killing many peripheral Euro nations that took loans in Swiss Franc and owe money in Euro's or even worse their home currencies.
Like all else, expect indebted citizens to get drilled and banks to be bailedsaved.
Some other indicators: Asian currencies are going nowhere after a strong year and that includes everyone's favourite carry currency the AUD with its near-5% yield (everyone includes Asian housewives, businessmen tycoons tired of losing money investing in hedge funds while the hedgies continue to draw bonuses and fat paychecks, amateur carry traders sick of 0% interest and seriously nagative rates in India, China, Indonesia etc); and watch RMB fixing closely in first few days of 2011. Asian exports to US and particularly Europe, are in some srious free fall in November and momentum in December is weaker than seasonality suggest. The Baltic is well below 2000 (as ZH pointed out), yet Dr Copper continue to stay close suspended near allt-time highs even as chinese and asian real estate development is already in its final leg before the deep abyss. For once, JP Morgan is on a winning trade, but while the Baltic is down, one wonders for how long this trade will remain winning. But it sure is a good way to give the impression that risk appetite is strong; each time the ES goes down, JPM buys a few more Cu futures, and the AUD follows, and gold/silver complex follows, then EUR, and there miraculously, ES and all risk assets are up again, Chairman is happy, prints more money, repeat loop. QED.
and the 2Y EONIA which is 2Y compounded overnight rate.
Can someone run through this for me? I have trouble understanding how a 2Y rate can be overnight, unless it means the overnight repo rate on 2Y debt?
Somebody (ZH) has to go with the Baltic Dry title:
Party like it's 1999...the BD close today (after peaking at 11700 in '08)
Best chart on the BDI is the BDI divided by the S&P - reached an all time peak of 8.5 and now back at 1.61 lows...nearly where it was during the '09 collapse when it went sub 1.
Please repeat after me - All's well w/ the BDI and they just built too many ships. Economy is in "sweet spot".
It's so "sweet" that Congress must overspend by $3.4 million dollars per minute to prevent unemployment from exploding to 40+ million people.
Why wouldn't you sell your sovereigns if Central Banks are hoovering them up? Maybe it is not so dire, just more gaming. However, Turkey is trading like toast and that is not a good sign for risk on in Europe.
Wealthy Europeans were nervous before but now they are getting scared.
While speaking of currencies....
The SPY has now broken out to 2-year highs in 4 of the 8 major currencies:
http://stockcharts.com/scripts/php/candleglance.php?$spx:FXE,$spx:FXY,$spx:FXC,$spx:FXS,$spx:FXA,$spx:FXM,$spx:FXB,$spx:FXF|D
Priced in PM's, your great SPY is a big loss on the year. And oil is only up 7% ytd as well.
I am becoming more and more bullish on oil.
On the verge of breaking out in many foreign currencies.
http://stockcharts.com/scripts/php/candleglance.php?$WTIC:FXE,$WTIC:FXY,$WTIC:FXC,$WTIC:FXS,$WTIC:FXA,$WTIC:FXM,$WTIC:FXB,$WTIC:FXF|D
Good let oil 'break out' and gas spikes up to 3.50 or 4...economy screeches to a total halt.
about time.... :)
Close your IAG, or let it ride? Nice call and trade
did anyone catch michael pento on kudlow just now? tyler mathison is hosting in kudlow's place and pretty much let pento stomp all over michael (?) westbury. westbury essentially guaranteed the u.s. will NEVER default on its debt. pento was beside himself in perpetual facepalm mode when he wasn't busy ripping westbury a new one. good times...
US may never 'default' at all, just get a paralyzing 'cyber attack' followed by 'terrorist attacks' and plunge into all out world war.
And if gold does something big in the next few days, it could also have a massive breakout in gold priced in foreign currencies:
http://stockcharts.com/scripts/php/candleglance.php?$GOLD:FXE,$GOLD:FXY,$GOLD:FXC,$GOLD:FXS,$GOLD:FXA,$GOLD:FXM,$GOLD:FXB,$GOLD:FXF|D
I didn't believe it at first, but I follow price, volume, and chart action only.
General Jim's TRE has already shown its hand, huge volume breakout off this flat base.
This is also confirmed by the huge volume break out of a base on SA, and Friday's huge volume surge on KGC.
Screw worthless fiat currencies.
Euro bonds about to get sold hard.
Good luck momo monetizer traders, youll need it bad with a fiatsco dollar rallying.
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Please watch the video “FEAR = CONTROL *Internet Censorship and Global War Looms” at (http://www.youtube.com/watch?v=tLwQstnk6tw).
-Anonymous
Wow, this is truly scary and absolutely real consequence of the financial collapse of 2008. What can we do to stop it??
Poor, poor Nic. He's been looking for something, anything to give him a glimmer of hope that the market will turn. Sorry Nic, any pull backs along the way to upper 1300's in 2011 will be shallow buying opportunities.
Wanger, you're a tool. A deluded tool, but a tool nevertheless.
It is an unfortunate and unplesant fact that when reality bitch slaps you that we will all have to suffer the same fate.
Anybody know what happened with the Canadian dollar? I read some talk about a devaluation. Certainly it went opposite to the Australian $ overnight, or day, depending on where you are.
Wanger, you're a tool. A deluded tool, but a tool nevertheless.
It is an unfortunate and unplesant fact that when reality bitch slaps you that we will all have to suffer the same fate.
actually Tom Keene of Bloomberg radio (mornings) and TV (noon hour) has been talking about EURCHF for some time - probably the best of of financial broadcasters in the order of Louis Rukeyser
Anyone keeping an eye on UUP, the dollar bull ETF?
I'm long some of the Jan 2012 calls.
benifit bonanza's and tax cuts...you folks are really jumping on the austerity train.
Historically it's quite common to see both USD and stocks move up together
(see 1980-2001)
Thanks Nic. The 3rd & 4th derivative plays ought to be a good staple trade.
Its another sign of how much bulshit passes for free market these days.
The Swiss is apparently a safety but from what? Is anybody really into believing that the currency of a country with such banking industry will be a safety in case of fiat currencies collapsing?