Posts by "jamshed"

Any more Euro shorts out there?

Euro will keep rising until all shorts are done with

The prospect of QE is huge for the US
This is driven by slowdown in consumer spending and phase out of the stimulus packages
Double dip / deflation is serious

corporations are rational - making good profits but not hiring and hoarding cash for tax hikes and more contractions

Ben and Co are going to get in the groove - couple of more monthly negative employment reports needed

On the other side, Trichet is taking the "anti inflationary policies" stance. As if he has many other options.


I think the Dollar could end aronud 1.5 by end 2010.
However, this is not much

What would amount to be big would be a short and hard landing for the dollar when global central banks readjust their hoardings.


China is the only credible force in the market who can adjust the dollar or euro rates and prevent a free fall as seen recently in the Euro reversal.

What stands in between a big Dollar fall and continued slow "talked down" depreciation of the dollar is China.

Rest assured that EU will make a mess of a simple issue

As it happened in Greek debt issue where a simple solution was so messed that ultimately a trillion dollar solution was required

Looks like the stress testing itself would also be mishandled between the various finance czars and ministers from the vairous Eu countries.

Ultimately, the europeons do manage to solve the problems but at a such a slow bureaucratic pace that gives the big hedge funds big opportunities to make directional gains. I expect the same today.

However, the underlying fact of a slowing US economy and China's endeavor to manage its trade surplus with a healthy euro and dollar rate to the yuan will allow the euro to appreciate towards and past 1.40 before the end of the year.


When the US conducte the stress test, they came up with a smart next move. The Fed distributed a large sum of money between the major banks (probably nine big banks). It was not disclosed which banks need it and which dont. Goldman did not need it but was forced to take it. Citi hugely needed it but its particular weakness was shrouded in the similar pattern of distribution to other banks like Goldman.


The Europeon test seems to mark some banks clearly that will need to raise more capital. Next, it is not clear who is going to give more capital to the needy banks? will these needy banks have to go to the capital markets? or does the ECB comes in with cheap funds? or do the national governments of the bank's principal have have to open the wallets? Or does it trigger mergers?
What about a run on a bank?


The europeon stress tests are a good idea but the initial outcome may cause more uncertainity and capital markets may get scared (again) because unlike the US Fed and treasury, no one seems to be incharge.


The ever opportunistic Sarkozy and the under siege Merkel may try to populize the topic to gain some lost ground. So another show down between these two cannot be ruled out

I do still hold the Euros I have :-)

Euro shorts beware

we r in the first phase of US slowdown - its a long way to go as the stimulus ends and the november election with a republican congress results in a logjam.
Minus a new stimulus and US interest rate expectations will crash.

Watch the US debacle in slow motion

Nay sayers will jump on board as various "resistance" lines are broken.

Eventually forecasters are worknig for clients - and if the clients start losing money big time, someone's gotta go.

have a nice weekend and happy trading

Hi,

Ashraf has been on the mark for almost all the time.
this last month being the only exception i remember

he is quite current to the actual price movements - meaning if a trend changes, it does not take him long to adjust - unlike pseudo economists like myself who would consider the big macros and not listen to the price moves

also, he is in THE leagues - he is connected, so he knows what Duetche bank is doing or advising to clients versus Citi versus HSBC etc ets. This is key to being ahead of the curve

and on top he is good with his economics background - sovereign issues, reserves etc

so, i do not know why he has missed a call on this one (or maybe he is right and the Euro will go down again - time will tell)


i would like to understand what it would take him to say that the trend for the Dollar has reversed
would the eurodollar breaching 200 day MA (around 1.38) be good enough?


I have lived few years in US and also in Europe.
I can see that the openess of US towards globalism has and is still destroying its economy via China and India etc.
Look at the 100 year charts of Dow. the 1982 -2000 (and before that the sixties) is exceptional returns triggered by cheap money fed into the US system and the long bonds going down in yield over decades. Especially the experience of Greenspan from 2002 to 2006 clearly shows that the FED is trying to avoid long recessions by keep rates low. As soon as you increase rates, (within next 1-2 years) the economy tanks. What r the FEDs going to do? Keep rates low for another 5 years? Maybe. But the fact is the FEDs cannot raise rates becuase the economy will tank. Yes, the US economy is going at 3+%. But maybe 2% of this is the fiscal stimulus that is going to expire. The US economy is so stimulated with monetary stimulus as it can possibly be - you r forcing people to keep borrowing on and on and on while real incomes are not rising and then all the loses are taken over by the government. There is a fundamental problem in the US economy that needs to be addressed.

There r 2 options - more fiscal stimulus and hope that at some point when stimulus X ends, the economy is able to grow on its own. This is doubtful due to permanent loss of jobs due to globalisation. the other option is for slow devaluation of the Dollar by buying long AND short term bonds by the FED and Obama and he multinationals "double" US exports in next five years.

In his interview today, Ashraf considers Euro capped below 1.28

I think the Euro has moved above its 50 day MA and now will target 100 day MA around 1.30

Major events this month are spanish bond sales worth 20+ billion euros, Euro bank stress tests and GDP numbers - specially for the the US 2nd quarter.

In my view, the eurozone will come up with no major negative news while US weakening story will become bigger causing the dollar index to fall below 80 and the Euro to move above 1.30

Its a matter of time before US GDP falls below 2% and then less than 1% by end of the year triggering the FED to retsart bond purchases in the next few months

I have said this several times before - US GDP numbers r fake
US GDP growth of 3% is mainly coming from the stimulus. Despite this heavy stimulus, the US economy does not have the escape velocity to move out of the recession scenario. this shows how weak the US economy. Permanent job losses which moved to India, China are to blame along with globalization.

Good luck to all the Dollar bulls out here
:-)