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King Dollar: Don't Call It A Comeback
Submitted by Nic Lenoir of ICAP
We have been forecasting and monitoring USD strength for weeks now. Our
main focus has been on GBPUSD, EURUSD, and AUDUSD for which we had the
most convincing technical arguments for a sell-off. Today USDCAD is
joining the band.
From the recent lows, we have a perfect Elliott structure with an
initial impulse (wave I or A), then a sideways flat correction, for
which even the substructure is pristine, and we finished the
consolidation yesterday forming a quasi morning star right on the 76.4%
retracement of wave I/A. Even for those who remain USD bears in the
medium term, the target on this upcoming wave III or C is at least
1.1030, which gives us quite a bit of upside potential, especially
given how much bullish divergence the market experienced while making
the lows.
This USDCAD price action is confirmed by AUDUSD as the pair came back
yesterday to test the neckline o the H&S as resistace and rejected
it. Target now on the downside is 86.24, but our medium term initial
support target remains 0.8260.
Good luck trading,
Nic
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Thanks. The yield on the 30 year has gone from
4% to nearly 5% in q4.
60 to 65 out of 100 is nearly?
Get your facts straight.
That's like saying 'BUT MOM! I GOT A 65 out of 100! That's nearly a A!!!!'
I am so sick of you people bashing treasuries when you have no clue how the banking system works.
Why the hell do people keep trying to push people out of the only frackin safe thing out there in the case of a financial collapse, which is what everyone is preaching? As far as I can figure, it's either that you're (A) Ignorant, (B) Completely Clueless or (C) Have an alternative agenda.
Why not preach a bit of frackin safety?
Can you explain? I'm not trying to provoke or question what you know, I'm legitimately interested in your viewpoint.
Thanks.
No, I understand and I feel bad that I feel so strongly about this that I've come to the point that I've begun to ridicule those who think just like the rest of the herd, but let's be fair... in the end, everyone is pushing people out of the one asset class that is guaranteed to actually pay them back.
Deflation is not over yet. Everyone agrees on this but yet everyone is quick to point out higher yields, but nobody wants to look at a chart, consider how banks truly work when it comes to asset valuation... everyone is calling what they FEEL or what some economic model that they bash 6 days out of the week but then pay attention to on the seventh.
IF THE MODELS FAILED BEFORE, WHY DO YOU BELIEVE THE MODEL THAT STATES HIGHER YIELDS?
Flag me all you want in this context (I already have 3 flags as junk, more will come I'm sure), but damnit people, you need to consider what exactly you're doing... You think higher yields will pop the market? Then where is safe to go? Additionally, HOW FAR DO YIELDS NEED TO DROP THAT WILL PREVENT A RECOOPERATION OF PRINCIPAL WITHIN A YEAR?
I guarantee you, it's further than you think.
Everyone claims look at the number of dollar bears! That's a contra-indicator... and then follow the herd on Treasuries?
Even the chart is in a massive ABCD up, but noooooooooooooooooooooooooooooooo, everyone wants to think EXACTLY THE SAME DAMN THING.
*sigh* I am so frustrated, but I promised myself to fight this fight as long as needed... yes, inflation will come, but not for another 4 or 5 years people, the shit we're experiencing right now is in a bounce that Bernanke is desparate to sustain, but there will come a crisis and when people rush for the doors, they don't let the herd in at once easily. Teach some prudence.
You are correct in your assessment of the markets, the models, the inherent risk and the herd mentality at ZH.
In 2000 I told people to by a ladder of treasuries from overnight to 30 year bonds. Just spread your funds evenly out over the yield curve and sit. NOBODY took me seriously, in fact the laughter was deafening. Safety is a big concern, preservation of capital is paramount for most people. Everyone who reads this blog knows the markets are rigged, they are a false economy. Why trade in a false market?
So now I'm supposed to listen to the same people who were so wrong for so long. Hyper-inflation is not around the corner, anyone with half a brain knows that. Gold bugs will end up like all the gold bugs from decades past. They will still be long when the markets have moved past them. But if they can wait another 20 years, until the next financial scare, maybe they will be able to sell out at break even.
I forgot (D) A parrot who is repeating what they've been taught, despite the fact that you've been given every damn reason to re-think what you've been taught.
What exactly do you mean by 'safe' ? Do tell.
Ummm, how well did gold fare the last time we had a deflationary spiral?
It got trashed and then immediately set about on a grinding upwards battle to new highs.
What did treasuries do?
What's more important, what will treasuries do long term?
This comes down to whether or not you have faith that a US government entity will be around in 1/5/10/30 years to pay you back in dollars that have not been inflated to infinity.
I personally don't.
I am Chumbawamba.
Yes, let's think long term and hold everything long term.
I guess you shouldn't sell stocks then eh?
Will the US be around? I think it's a better bet that the US will be around since *everyone* has issued their debt in our currency.
Let's say it is around. Let's say you get your payment. Who cares if it's guarenteed if that payment won't be able to buy a stick of chewing gum? If you are convinced that deflation will keep interest rates low, on the basis that interest rates are soley a function of inflation expectations then you would have to conclude that the safest place for money is in money market funds.
Actually, the safest place for your money is either in your wallet/purse or in a safe.
Treasures in the last deflationary spiral first did well and then the second wave saw the increase of yields and revulsion of government bonds. This was in the 30s and 40s. The increase in yields is the only mechanism which keeps government excess in check. If we did not have a credit system , then Weinmar germany would be relevant. As the FED monetized debt illegally that is the only way they can reflate money supply without having Congress intervene. The understand deflation requires a look at the handful of occasions in has occurred. The south seas bubble. Tulip Mania. The depression of the 30s. Rome. Pre- civil war crash. I think most of the above if not all have a component of unregulated monetization of credit and some have total fiat unbacked currency. Bonds are going to fail because not only does it not return a good yield but sovereign debt is getting twitchy with excessive intervention. So, round 2 of the collapse will have debt revulsion across the board. Japan is being realized as the major g5 nation most likely to collapse from excessive debt creationhat cannot be paid back.
Also keep in mind that since the 70s this is one of he longest experiments in pure fiat history. So inflationists need to understand that we are in uncharted waters. In any case Gold will do fine as a reserve currency that is fungible and internationally accepted. The dollar, due to the amazing implosion of fiat money supply, will be chronically strong even if it is backed in vapor. Like a train, sometime in the future sovereign debt will go off the tracks with the US dollar near the back. Resource and well-managed countries like Australia and Canada may be the caboose. The euro basket currency may suddenly dive with Spain and Greece on the edge.
Agreed. Longer term Williams is right and the train will leave the tracks. But in the short term the dollar and US treasuries are going to look better than other options for preserving wealth. The really ugly tricky part is going to be timing the navigation out of dollars and treasuries. Good luck with that!
Coco.... you say first part and second part... how about you provide dates along with that argument so people can see that you didn't get the higher yields within 2 years, which is what the argument is now.
Welcome to the "get attacked for telling the truth" club.
Oh, do you already have your membership card, too?
The very essence of community breeds group think. In being mindful that selecting a community represents the act of choosing to gather with like-minded individuals, these same individuals eventually take on the traditional roles customary to any conventional society (i.e.- dominant v. subordinate; aggressive v. passive; direct v. indirect; confident v. timid; serious v. frivolous; intellectual v. emotional; etc.)
Further, communities are (IMO) defined by two definitive actions of select individuals: (1) those who exert themselves most forcefully on their peers; and (2) those who fall in favor with the majority opinion of their peers. The reasons for the first example are quite objective, yet the reasons for the second example become much more subjective. As this relates to ZH users: Gordon_Gekko raving about gold $2,000+; chumbawamba and his bashing of Goldman Sachs; geopol being the consummate class clown.
In further discussing the subjective nature of identifying with like individuals, this may happen for any number of reasons. Often times people who state a position rooted in sound logic and reason find favor with others who possess an open mind, as those open-minded individuals are quite apt to receiving unconventional thoughts and alternative perspectives from their peers. Others may choose to pile on a hot button topic that is quite popular (or unpopular, depending your own perspective) to those with similar perspectives, and groupthink via mob mentality ensues.
Populism in its most basic form does not have to be damaging, but often times the residual effects do carry grave consequences. The most damning among them (again, IMO) being close-mindedness. The real tragedy here is that two parties with dissimilar viewpoints become unable to exchange knowledge, which would inherently serve only to benefit each other by increasing both the breadth and depth of their understanding on the given topic of contention.
So what is the main culprit? Imperfect knowledge, yielding to psychological anchoring.
In dismissing the old saying that “we can disagree without being disagreeable,” the dominant/aggressive personalities latch on to those direct/confident users who would dare challenge their sacredly held viewpoints, and berate them to no end with incredibly personal and unnecessary attacks. Later, the indirect/timid users log out of their ZH accounts and cowardly post snide, snarky remarks as an anonymous user.
Unfortunately, rare is the intellectual user who also owns the confidence to step beyond communal boundaries to align themselves with those brave enough to challenge conventional dogma. Quite oddly enough, these forsaken attempts by the meek might actually slow or eventually end these unnecessary attacks altogether, yielding a more progressive and beneficial conversation.
The real victim in all of this becomes the community itself. As thoughts and ideas fail to be shared, the level of general knowledge fails to reach maximum potential. As we fail to maximize our potential, we are faced with dire consequences, including:
· People like our central bankers debasing our currency.
· People like W and Obama blowing ever-growing amounts of sunshine up our collective asses.
· People like our Senators and Congressmen looting our businesses that we built; decimating our hard-earned savings for which we sacrificed so dearly to create; and destroying our prospects for future income and personal wealth accumulation that we deserve.
Zero Hedge is a great thing. But all great things are conceived with inherent flaws that ultimately lay the seeds to their ultimate demise. No one kingdom or global power has survived ad infinitum. No one lives forever.
Appreciate what Tyler has created in ZH before we do our worst to drive away those who may offer those same counter-opinions that Tyler sought to provide a platform to expound upon.
[Disclosure - With Gordon_Gekko, chumbawamba, and geopol, I share numerous viewpoints, and disagree with others, on each respective topic]
the ultimate nonproductive activity, speculative trading crosses on the fiat currencies of bankrupt States.
Yeah,but what do they do with their "nonproductive"-ly generated money?
The gov't PR theme for 2010 as reflected in chicago pmi will be finding ays to goose employment numbers so as to affirm Summers and Geithners claims thaqt job growth to return soon. Let the show begin...asan aside seekingalpha running story about Bill MIller positioning for recovery, which i guess means no change..
Off topic:
http://online.wsj.com/article/SB126219443434710499.html
Police Investigate Van in Times SquareNEW YORK – An area around New York City's Times Square has been blocked off while a bomb squad investigates an abandoned van.
The Nasdaq's midtown Manhattan headquarters was evacuated as a precaution, according to media reports.
The bomb squad is using a robot-based camera to approach the vehicle. Police said the area around 42nd Street between Seventh Avenue and Broadway has been blocked off as a precaution.
The van is a 1992 Dodge, and has tinted windows. A placard from a nonexistent law enforcement agency is on the dashboard. It has no license plates.
Police responded around 8:30 a.m. ET after a 911 call about a suspicious van. Security is tight as the New Year approaches.
If that van was a-rockin' then I hope they didn't come a-knockin'.
I am Chumbawamba.
LL Cool J reference.
Nice.
Destruction, terror, and mayhem
Pass me a sissy soft sucka I'll slay him
Farmers (What!!!) Farmers (What!!!)
I'm ready (we're ready!!!)
I think I'm gonna bomb a town (get down!!)
Don't u neva, eva, pull my lever
Cuz I explode
And my nine is easy to load
I gotta thank God
Cuz he gave me the strength to rock
HARD!! knock you out, mama said knock you out
on Wed, 12/30/2009 - 12:44
#177953
Ummm, how well did gold fare the last time we had a deflationary spiral?
Ummm--gold did very well--
Not at all diagreeing with your $ call--
But "everything" except perhaps the $ will deflate against gold,just like it did last deflation--
http://4.bp.blogspot.com/_nSTO-vZpSgc/RbZwf5lgCXI/AAAAAAAAAN0/WJYO6dh-og...http://2.bp.blogspot.com/_nSTO-vZpSgc/RbmMtplgCjI/AAAAAAAAAPk/NtN5JDlwHi...
Sorry--for dead link above--
http://4.bp.blogspot.com/_nSTO-vZpSgc/RbmVmJlgCkI/AAAAAAAAAPs/uJ8e5vdJSj...
FFS--blew it---try this one
http://4.bp.blogspot.com/_nSTO-vZpSgc/RbZwf5lgCXI/AAAAAAAAAN0/WJYO6dh-og...
I warned of an impending stockmarket crash in early 2007.
I warned of a bottom in April 2009.
I warned of the USD rally several months ago.
USD intra day bearish signals continue and more retracement is possible but the trend on the daily chart remains up.
http://www.zerohedge.com/forum/market-outlook-0