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Posts by "aviat72"
16 Posts Total by "aviat72":
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Posts by Anonymous "aviat72":
A number of funds are reducing their PM exposure as US yields rise. Ashraf has often talked about how long term bond yields affect currency flows. The 10 year, and especially the 30 year yields in the US are rising, and lifting the dollar with it.
Further the blow-out top in silver last Tuesday is as good as it gets as a technical top (at least for the short term). The silver-gold ratio has reached a significant measured move milestone. Copper has also reached a major resistance level. All these point to a pause in the "stuff" rally. There is also the action of the emerging markets trying to rein in inflation in one form or another which is likely to keep commodities in a corrective mode for some time.
Also keep in mind that the Fed has been universally condemned for its QE2. It got suckered in by the rise in first time unemployment claims, which have since declined to pre-Lehman levels. It is not outside the realm of possibility that QE2 itself might be constrained (e.g. the buybacks spread over a longer period of time).
So a pause in the PM run is perfectly reasonable outcome to expect.
When you mean net long/short are you referring to positions of Large Speculators or Commercials. Being a paper contract, the positions by all the different participants will net out.
Thank you for all the information you share.
Whenever you have the time, do share your thoughts about the end-game to the PIIGS crisis.
I agree with you that the EMU will likely stay intact; there is too much at stake. However, the holes are fairly big.
How far do you see the current crisis and the revelation about the off-balance sheet sovereign debt affect Euro's credibility as a reserve currency? The likely fall-out is greater appetite for hard-assets/commodity currencies. This can result in a situation where the DXY rises because of the weight of the EUR/GBP, while commodities also rise as reserves held in Euros seek other alternatives. Possible??
BNP is out with a EU320 Billion estimate for a bailout package.http://www.bloomberg.com/apps/news?pid=20601109&sid=a.yAFN.xKOIg&pos=15
Do you think that such a package will go through? How much of it is going to be QE style money printing and how much will be loans? Will the IMF get involved (like suggested by Irwin Stelzer for the UKhttp://www.businessweek.com/news/2010-02-17/cameron-should-mull-u-k-plea-to-imf-stelzer-says-update1-.html).
Thanks for the great posts and twits. A few months ago I had commented on the forums that the Euro will face an existentialist issue and its status as a reserve currency will come under pressure. We are seeing some of those canaries sing now.
From your perch, how bad do you see the crisis become? This is a sovereign macro issue and may take a long time to play out but what is the end game you see here?
Thank You
Where do you think Cable is heading? It just bounced off the Daily DeMark TDST Resistance around 1.6658 near 2010 EST. Even talk of increased QE by the BOE did not help the Dollar today though as you pointed out in your IMT that comment of the non-voting Fed Governor seems to have been the green light to sell the USD.
Also any thoughts on the entire Spanish bank situation (Variant Perception) and the potential impact on ECB policy and the Euro?
Ashraf:
This note talks about the Spanish housing bubble and the loans tied to them. They estimate total losses in the order of Eur 250B It seems the banks in Spain seem to have some leeway in how to mark their book. Is this something which will blow up someday, or something which will remain hidden under the carpet forever?
Much of the negative reports about the Euro Zone have focussed on the Eastern Europe and the Baltic. But Spanish housing bubble seems to be the grand-daddy of them all. The number of unsold homes in Spain is the same as the US, a market six times as big as Spain! How do you think this will play out?
Do you expect the ECB also to follow the BOE (in some form), after the German elections are over and done with?
Why is the poor bond auction resulting in a stronger USD? Shouldn't it raise the fear of more QE?
Thanks for the response. So in your opinion, the QE related selling of a dollar is more of a macro sell since it signals a poor economy (and future consequences of the fiscal & monetary policy), and not driven that much by technical selling because of some underlying dynamics of currency flows triggered by QE or bond auctions.
I am a novice in this area to even thinking of giving targets. My strategy so far has been to fade big up moves in the EURUSD which seems to have worked. My time frame is less than a day since a day in this market is almost equal to a week in a normal market (especially with equities).
The Goldman/Morgan complex is bulling the Euro too, while they beat the drums on oil. Further there are murmurs of a turbo version of QE being unveiled soon to scare the bond vigilantes a bit. All of this should give a technical boost to the Euro in the short term.
One aspect I want to learn more about is the relation between Treasury bond sale/purchase and Euro. When the Fed buys bonds they are sending more dollars into the system, which are often sold pushing a pressure on the USD. But when the Treasury issues more debt, foreign money does come in. However this is not considered a positive for the USD. Is this because the foreign money is already denominated in USD but the sellers of treasuries to the Fed want out of the USD?